Do It! Review 20-6

Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $505,000, variable expenses of $368,000, and fixed expenses of $148,000. Therefore, the gloves and mittens line had a net loss of $11,000. If Gator eliminates the line, $45,000 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).

Net Income Increase (Decrease) Continue Eliminate Sales $ $ $ Variable costs Contribution margin Fixed costs Net income / (Loss) $ The analysis indicates that Gator should the gloves and mittens line