Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Gila Fashion in Miami operates three departments: Men's, Women's, and Accessories. Gila Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each
Gila Fashion in Miami operates three departments: Men's, Women's, and Accessories.
Gila Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department's square footage. Departmental operating income data for the third quarter of the current year are as follows:
The store will remain in the same building regardless of whether any of the departments are discontinued. Should Gila fashion discontinue any of the departments? Give your reason.
Gila Fashions Product Line Contribution Margin Income Statement For the Year Product lines Men's Women's Accessories Sales revenue $ 106,000 $ 54,000 $ 102,000 $ Less: Variable expenses 61,000 31,000 89,000 Contribution margin 45,000 $ 23,000 $ 13,000 $ Less: Fixed expenses 25,000 18,000 24,000 20,000 $ 5,000 $ (11,000) $ Operating income Company Total 262,000 181,000 81,000 67,000 14,000 The Men's and Women's Departments are earning income. While the Accessories Department appears to be even this department has a positive contribution margin. The Accessories Department is contributing $ U covering fixed costs. losing money, t oward
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started