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Gila Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of 2016 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 2016 are as follows: (click the icon to view the data.) Assume that the fixed costs assigned to each department include only direct fixed costs of the department Salary of the department's manager Cost of advertising directly related to that department 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 decreases to profits w a parentheses or minus sign.) Gila Fashions Analysis of Dropping the Accessories Department Expected decrease in revenues Expected decrease in expenses: Expected decrease in variable expenses Expected decrease in fixed expenses Expected decrease in total expenses n operating income Under these circumstances, should Gila Fashions drop any of the departments? Give your reasoning. Decision: Gila Fashions because relevent expenses are greater than the revenues which will result in an increase in operating income if the department is dropped. revenues are greater than the relevant expenses which will result in a decrease in operating income if the department is dropped revenues from each department exceed variable expenses from each department Choose from any list or enter any number in the input fields and then
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