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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 $
Less: Variable expenses
Contribution margin
Less: Fixed expenses:
Wages $
Insurance on inventory
Advertising
Net operating income loss $
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 longterm employee currently earning an annual salary of $
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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