Alexa Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of $2024$ are as follows:

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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.

Alexa Fashions

Analysis of Dropping the Accessories Department

Expected decrease in revenues

Expected decrease in costs:

Expected decrease in variable costs

Expected decrease in fixed costs

Expected decrease in total costs

in operating income

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

Data table