i More Info oe D men Mila Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department's square footage. If the company discontinues one of the current departments, it plans to replace the discontinued department with a Shoe Department. The company expects the Shoe Department to produce $83,000 in sales and have $49,000 of variable costs. Because the shoe business would be new to Mila Fashion, the company would have to incur an additional $6,900 of fixed costs (advertising, new shoe display racks, and other fixed costs) per quarter related to the department. Print Done atif th i X Data Table - Mila Fashions Product Line Contribution Margin Income Statement hil For the Year SH Product lines Men's Women's Accessories Company Total Sales revenue 114,000 $ 52,000 57,000 $ 29,000 104,000 $ 86,000 275,000 167,000 Less: Variable expenses Contribution margin 62,000 $ 21,000 28,000 $ 23,000 18,000 $ 20,000 108,000 64,000 Less: Fixed expenses $ 41,000 $ 5,000 $ (2,000) $ 44,000 Operating income Print Done artiu ureck Answer. First, calculate the relevant operating income from the Shoe Department. Mila Fashion Operating Income-Shoe Department Expected revenues Expected expenses: Variable expenses Fixed expenses Total expected expenses Expected relevant operating income Next, let's calculate the contribution margin of the Shoe Department. Mila Fashion Product Line Contribution Margin Income Statement For the Year Product lines Men's Women's Accessories Shoes Sales revenue Less variable expenses Contribution margin