Decision to Discontinue a Product

On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children's Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixed costs would not be materially affected by the discontinuance?

P) Music and Podcasts, Free ar X CengageNOWv2 | Online teachin X Course Hero X New tab X + X @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false . . Ch. 25, Quiz B Decision to Discontinue a Product ? On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children's Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixed costs would not be materially affected by the discontinuance? Foremost Footwear Inc. Product-Line Income Statement For the Year Ended April 30, 20Y7 Children's Men's Women's Total Shoes Shoes Shoes Sales $165,000 $300,000 $500,000 $965,000 Costs of goods sold: Variable costs $105,000 $150,000 $220,000 $475,000 Fixed costs 32,000 60,000 120,000 212,000 Total cost of goods $137,000 $210,000 $340,000 $687,000 sold Gross profit $28,000 $90,000 $160,000 $278,000 Selling and adminstrative expenses: Variable selling and $21,000 $45,000 $95,000 $161,000 admin. expenses Fixed selling and 17,000 20,000 25,000 62,000 admin. expenses Total selling and Type here to search O 9:47 PM 38 850F ~ 8/8/2021 741P) Music and Podcasts, Free ar X CengageNOWv2 | Online teachin X Course Hero X New tab X + X C & https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false . . Ch. 25, Quiz B Children's Men's Women's Total Shoes Shoes Shoes Sales $165,000 $300,000 $500,000 $965,000 Costs of goods sold: Variable costs $105,000 $150,000 $220,000 $475,000 Fixed costs 32,000 60,000 120,000 212,000 Total cost of goods $137,000 $210,000 $340,000 $687,000 sold Gross profit $28,000 $90,000 $160,000 $278,000 Selling and adminstrative expenses: Variable selling and $21,000 $45,000 $95,000 $161,000 admin. expenses Fixed selling and 17,000 20,000 25,000 62,000 admin. expenses Total selling and $38,000 $65,000 $120,000 $223,000 admin. expenses Income (loss) from $(10,000) $25,000 $40,000 55,000 operations OneDrive X Screenshot saved If the Children Shoe's are discontinued, the company's would by $ The screenshot was added to your OneDrive. Type here to search O 9:47 PM 38 85.F 8/8/2021 741