Gaston Fashion store operates three departments: Men's, Women's, and Accessories. Gaston Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on the each department's floor space. If Gaston Fashion drops one of the current departments, it plans to replace the dropped department with a Shoe Department. The company expects the Shoe Department to produce $85,000 in sales and $56,000 of variable costs. Because the shoe business would be new to Gaston Fashion, the company would have to incur an additional $6,000 of fixed costs (advertising, new shoe display racks, and so forth) per quarter related to the department. Departmental operating income data for the third quarter of the current year are as follows: (Click the icon to view the data.) The store will remain in the same building regardless of the decision. What should Gaston Fashion do now? Calculate the expected increase (decrease) in operating income by replacing a department with a Shoe Department. (Use parentheses or a minus sign to enter a decrease in operating income.) Gaston Fashion X Analysis of Replacing a Department with a Shoe Department Operating income data Expected increase in revenues Expected increase in expenses: Department Variable expenses Men's Women's Accessories Total Fixed expenses 100,000 $ $1,000 $ 98,000 $ 259,000 Sales revenue . . . . . . . . . . . . Increase in total expenses 53,000 37,000 82,000 172,000 Expected increase (decrease) in operating income Variable expenses . . . . . 31,000 28.000 17.000 76,000 Fixed expenses. Calculate the contribution margin of each of the existing departments. 84,000 65.000 99,000 248,000 Total expenses . . . . Department Contribution Margin 16,000 $ (4,000) $ (1,000) $ 11,000 Men's Department Operating income (loss) . . . .. Women's Department Accessories Department Under these circumstances, should Gaston Fashion drop any of the departments and replace it with a Shoe Department? Print Done Gaston Fashion should consider replacing the Accessories Department with a Shoe Department replacing the Men's Department with a Shoe Department not replacing any department with a Shoe Department replacing the Women's Department with a Shoe Department