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Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 2018 Children's Shoes Men's Shoes Women's Shoes $280,000 $300,000 $500,000 Total $1,080,000 Sales
Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 2018 Children's Shoes Men's Shoes Women's Shoes $280,000 $300,000 $500,000 Total $1,080,000 Sales Costs of goods sold: Variable costs $(135,000) (45,000) $(180,000) $100,000 $(150,000) (60,000) $(210,000) $90,000 $(220,000) (120,000) $(340,000) $(505,000) (225,000) ${730,000) $350,000 $160,000 Fixed costs Total cost of goods sold Gross profit Selling and administrative expenses Variable selling and admin, expenses Fixed selling and admin expenses Total selling and admin. expenses Operating income (loss) $(100,000) (30,000) $(130,000) $(30,000) $(45,000) (20,000) $(65.000) $25,000 $195,000) (25,000) $(120,000) 540,000 ${240,000) (75,000) $(315,000) $35,000 a. Prepare a differential analysis to determine the flow in the general manager's decision. If an amount is zero, entero". If required, use a minus sign to indicate a los Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Children's Shoes November 30 Continue Discontinue Children's Shoes Children's Shoes (Alternative 1) (Alternative 2) Differential Effects (Alternative 2) Revenues Costs: Variable cost of goods sold $100,000 590,000 $160,000 $350,000 Gross profit Selling and administrative expenses: Variable selling and admin. expenses Fixed selling and admin. expenses Total selling and admin, expenses Operating income (loss) 5(95,000) $(100,000) (30,000) $(130,000) $130,000) $(45,000) (20,000) $(65,000) $25,000 (25,000) $(120,000) $40,000 5(240,000) (75,000) $(315,000) $35,000 . Prepare a differential analysis to determine the flow in the general manager's decision. If an amount is zero, enter *o". It required, use a minus sign to indicate a los Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Children's Shoes November 30 Continue Discontinue Children's Shoes Children's Shoes (Alternative 1) (Alternative 2) Differential Effects (Alternative 2) Revenues Costs: Variable cost of goods sold Variable selling and admin, expenses Fixed costs Profit (05) b. What is the flaw in the decision to discontinue Children's Shoes, if it is assumed fixed costs would not be materially affected by the discontinuance? If the children's Shoes are discontinued, the company's loss would by
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