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Gila Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of 2018 are as follows: (Click the icon
Gila Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of 2018 are as follows: (Click the icon to view the data.) (Click the icon to view additional information.) If Gila Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should Gila Fashions drop any of the departments? Give your reasoning. Begin by completing the following analysis to determine the increase or decrease in operating income from dropping the Accessories Department, the only Department showing an operating loss this quarter. (Enter dec to profits with a parentheses or minus sign.) Gila Fashions Analysis of Dropping the Accessories Department Expected decrease in revenues Expected decrease in costs: Expected decrease in variable costs Data Table Gila Fashions Expected decrease in fixed costs Income Statement Expected decrease in total costs in operating income For the Quarter Ended September 30, 2018 Department Women's Accessories $ 103,000 $ 51,000 S 96.000 S 59.000 30,000 85,000 Men's Net Sales Revenue Total 250.000 174,000 Variable Costs Contribution Margin 21,000 11.000 44.000 29,000 76,000 72,000 18,000 Fixed Costs 25,000 Choose from any list or enter any number in the input fields and then click Check Al $ 15,000 $ 3,000 $ (14,000) S 4,000 Operating Income (Loss) 1 part
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