I need to check my work. Thanks!

Julianne's of Appletown operates a high-end boutique in Appletown. The merchandise they sell are in three different product lines: Clothing, Shoes, and Purses/Handbags. During a recent fiscal year, Purses/Handbags has not been performing well. The owners are considering dropping this product line, although some of their key customers have stated that they appreciate the store carrying these items, resulting in the ability to match purses to outfits. Although you (a hired consultant) feel that this customer feedback is critical, the shop's owners, Julianne and her husband, Fred, only want to look at hard numbers. Julianne and Fred have asked you to analyze relevant costs and to make a recommendation for retaining or dropping this product line based on the numbers.

As a starting point, you developed the following contribution margin income statement for the past quarter:

Julianne's of Appletown
Contribution Margin Income Statement
For the Quarter Ending December 31, 20##
			Product Line
		TOTAL	Clothing	Shoes	Purses/Handbags
Sales		$ 347,250	$ 159,735	$ 121,538	$ 65,978
Variable Expenses		$ 158,172	$ 63,894	$ 54,692	$ 39,587
Contribution Margin		$ 189,078	$ 95,841	$ 66,846	$ 26,391
Fixed Expenses:
Rent	relevant or irrelevant?	$ 60,000	$ 40,000	$ 10,000	$ 10,000
Salaries	relevant or irrelevant?	$ 58,275	$ 19,425	$ 19,425	$ 19,425
Advertising	relevant or irrelevant?	$ 24,092	$ 11,082	$ 8,432	$ 4,577
Utilities	relevant or irrelevant?	$ 8,475	$ 3,899	$ 2,966	$ 1,610
Depreciation--Fixtures	relevant or irrelevant?	$ 4,100	$ 1,886	$ 1,435	$ 779
Depreciation--Point of Sale System	relevant or irrelevant?	$ 875	$ 403	$ 306	$ 166
Insurance	relevant or irrelevant?	$ 4,000	$ 1,840	$ 1,400	$ 760
General Administrative	relevant or irrelevant?	$ 9,482	$ 4,362	$ 3,319	$ 1,802
Total Fixed Expenses		$ 169,299	$ 82,896	$ 47,283	$ 39,120
Net Operating Income (Loss)		$ 19,779	$ 12,945	$ 19,562	$ (12,729)

Instructions:

Specify whether each fixed expense is relevant (avoidable) or irrelevant (unavoidable) by typing the correct response in the shaded cell next to that cell. And then determine whether or not the company should retain or drop the Purses/Handbags product line, and why.

Finally, make a recommendation to Julieanne and Fred regarding Purses/Handbags: should the product line be retained or dropped, and why? And support your answer with an illustration, like a contribution margin analysis or a new contribution margin income statement, that demonstrates the impact of dropping the product line.