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Diva Footwear is contemplating if it should continue producing platform shoes. The following information is available for the company's segments. Platform Shoes Athletic Shoes Boots
Diva Footwear is contemplating if it should continue producing platform shoes. The following information is available for the company's segments.
Platform ShoesAthletic ShoesBoots
Sales$120,000$420,000$360,000
Variable costs64,000220,000140,000
Contribution margin56,000200,000220,000
Direct fixed costs45,00070,00090,000
Allocated fixed costs20,00070,00060,000
Net income($9,000)$60,000$70,000
If platform shoes are dropped, sales of athletic shoes are expected to drop by 10%. What impact will occur to Diva Footwear's net income?
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