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Clothing Retail Store s accountant prepared the following income statement for the teenagers accessories product line: Sales $ 3 , 1 5 0 , 0

Clothing Retail Stores accountant prepared the following income statement for the teenagers accessories product line:
Sales $ 3,150,000
Less: Variable expenses 1,480,500
Contribution margin 1,669,500
Less: Fixed expenses:
Wages $ 1,134,000
Insurance on inventory 63,000
Advertising 693,0001,890,000
Net operating income (loss) $ (220,500)
Management is concerned about the loss and is considering dropping the product line. If the product line is dropped, a job has to be created elsewhere for a long-term employee currently earning an annual salary of $107,000.
Required:
Calculate the increase or decrease in the operating income in both alternatives.
Should the teenagers accessories product line be dropped?
multiple choice
Yes
No

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