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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
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, 2016 | ||||||||||
Children's Shoes | Men's Shoes | Women's Shoes | Total | |||||||
Sales | $235,000 | $300,000 | $500,000 | $1,035,000 | ||||||
Costs of goods sold: | ||||||||||
Variable costs | $130,000 | $150,000 | $220,000 | $500,000 | ||||||
Fixed costs | 41,000 | 60,000 | 120,000 | 221,000 | ||||||
Total cost of goods sold | $171,000 | $210,000 | $340,000 | $721,000 | ||||||
Gross profit | $64,000 | $90,000 | $160,000 | $314,000 | ||||||
Selling and adminstrative expenses: | ||||||||||
Variable selling and admin. expenses | $46,000 | $45,000 | $95,000 | $186,000 | ||||||
Fixed selling and admin. expenses | 35,000 | 20,000 | 25,000 | 80,000 | ||||||
Total selling and admin. expenses | $81,000 | $65,000 | $120,000 | $266,000 | ||||||
Income (loss) from operations | $(17,000) | $25,000 | $40,000 | $48,000 |
If the children Shoe's are discontinued, the company's would by $.
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