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Alexa Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of 2024 are as follows: (Click the icon
Alexa Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of 2024 are as follows: (Click the icon to view the data.) (Click the icon to view additional information.) If Alexa Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should Alexa Fashions drop any of the departments? Give your reasoning. Begin by completing the following analysis to determine the increase or decrease in operating income from dropping the Accessories Department, the only Department showing an operating loss this quarter. (Enter decreases to profits with a parentheses or minus sign.) Alexa Fashions X Data Table Analysis of Dropping the Accessories Department Expected decrease in revenues Expected decrease in costs: Alexa Fashions Expected decrease in variable costs Income Statement Expected decrease in fixed costs For the Quarter Ended September 30, 2024 Expected decrease in total costs Department Men's Women's Accessories Total in operating income Net Sales Revenue $ 109,000 $ 53,000 $ 101,000 $ 263,000 Variable Costs 60,000 27,000 90,000 177,000 Contribution Margin 49,000 29,000 26,000 25,000 11,000 20.000 86,000 74,000 Fixed Costs $ 20,000 $ 1,000 $ (9,000) $ 12,000 Operating Income (Loss) More Info Assume that the fixed costs assigned to each department include only direct fixed costs of the department: Salary of the department's manager Cost of advertising directly related to that department
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