Decision to Discontinue a Product On the basis of the following data, the general manager of Featherweight Shoes Inc. decided to discontinue Children's Shoes because it reduced income from operations by $17,000 Featherweight Shoes Inc. Product-Line Income Statement For the Year Ended April 30, 20Y8 Men's Children's Women's Total Shoes Shoes Shoes Sales $235,000 300,000 $500,000 $1,035,000 Costs of goods sold Variable costs Fixed costs Total cost of goods sold $130,000 $150,000 60,000 $171,000 $210,000 $90,000 $220,000 120,000 $340,000 $160,000 $500,000 221,000 $721,000 $314,000 41,000 Gross profit $64,000 Selling and administrative expenses $46,000 35,000 $81,000 $(17,000) $45,000 20,000 $65,000 $25,000 $95,000 25,000 $120,000 $40,000 $186,000 80,000 $266,000 $48,000 Variable selling and admin. expenses Fixed selling and admin. expenses Total selling and admin. expenses Income (Loss) from operations a. Prepare a differential analysis to determine the flaw in the general manager's decision. If an amount is zero, enter "O. Use a minus sign to indicate a loss. Differential Analysis Continue (Alternative 1) or Discontinue (Alternative 2) Children's Shoes a. Prepare a differential analysis to determine the flaw in the general manager's decision. If an amount is zero, enter "o". Use a minus sign to indicate a loss Differential Analysis Continue (Alternative 1)or Discontinue (Alternative 2) Children's Shoes Continue Children's Shoes (Alternative 1) Discontinue Children's Shoes (Alternative 2) Differential Effect on Income (Alternative 2) Revenues Costs Variable cost of goods sold Variable selling and admin. expenses Fixed costs Income (Loss) Feedback Y Check My Work For continue and discontinue alternatives subtract the costs from the revenue. Separate variable from fixed costs. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 2 from alternative 1 Learning Objective 1. b. What is the flaw in the decision to discontinue Children's Shoes, if it is assumed fixed costs would not be materially affected by the discontinuance? The general manager is not focusing on the differential revenues and costs. If the children's Shoes are discontinued, the company's income would decreaseby