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Dolls R Us sells three products in its retail stores: baby dolls, teenage dolls, and plush dolls. Results of the 4th quarter are below: Baby

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Dolls R Us sells three products in its retail stores: baby dolls, teenage dolls, and plush dolls. Results of the 4th quarter are below: Baby Dolls Teenage Plush Total Units sold 1,000 2,000 2,000 5,000 Revenue $31,000 $43,000 $26,000 $100,000 Variable departmental costs 22,000 24,000 13,000 59,000 Direct fixed costs 5,000 4,000 3,000 12,000 Allocated fixed costs 6,000 7,000 7,000 20,000 Net income ($2,000) $ 8,000 $ 3,000 $ 9,000 Demand of individual products is not affected by changes in other product lines. HINT - be clear between direct fixed costs and allocated fixed costs. A) Are direct fixed costs avoidable? B) Are allocated fixed costs avoidable? C) What is the incremental impact on income should Dolls R Us discontinue the baby division? $

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