Data:

		Department
		Men's	Women's	Accessories	Total
	Sales revenue . . . . . . . . . . . . . .	$113,000	$72,000	$112,000	$297,000
	Variable expenses . . . . . . . . . . .	74,000	31,000	94,000	199,000
	Fixed expenses . . . . . . . . . . . . .	27,000	21,500	27,000	75,500
	Total expenses . . . . . . . . . . . . . .	101,000	52,500	121,000	274,500
	Operating income (loss) . . . . . .	$12,000	$19,500	$(9,000)	$22,500

Question:

Knight Fashion store operates three departments: Mens, Women's, and Accessories. Knight Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department's floor space. Departmental operating income data for the third quarter of the current year are as follows:

The store will remain in the same building regardless of whether any of the departments are dropped. Should

Knight Fashion drop any of the departments? Give your reason.

The Men's and Women's Departments are .. While the Accessories Department appears to be , even this department has a .. The Accessories Department is contributing $........nothing toward covering fixed costs sales revenue total expenses . Knight Fashion intends to remain in the same building whether or not it drops any of the departments. Consequently, the fixed costs will .change remain the same whether or not Knight Fashion eliminates a department. These fixed costs are therefore ..irrelevant relevant in the decision whether to eliminate a department.In sum, Knight Fashion .