Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Gila Fashion store 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
Gila Fashion store 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 floor space. 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 whether any of the departments are dropped. Should Gila Fashion drop any of the departments? Give your reason. The Men's Department is . While the Women's and Accessories Departments appear to be , even these departments have a . The Women's Department is contributing $ | and the Accessories Department is contributing $ toward covering Gila Fashion intends to remain in the same building whether or not it drops any of the departments. Consequently, the company's total fixed costs will whether or not Gila Fashion eliminates a department. Fixed costs are therefore in the decision whether to eliminate a department. In sum, Gila Fashion should X Operating income data Department Men's Women's Accessories Total $ 98,000 S 63,000 $ 103,000 $ 264,000 Sales revenue . . . . Variable expenses 57,000 37,000 84,000 178,000 24.000 30.000 27,000 81.000 Fixed expenses. 81,000 67,000 111,000 259,000 Total expenses . . 17,000 $ (4,000) S (8,000) $ 5,000 Operating income (loss) . . . .. Print Done
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