If Mara Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should

Mara 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 with a parentheses or minus sign.)

Mara Fashions
Analysis of Dropping the Accessories Department
	Expected decrease in revenues
	Expected decrease in costs:
	Expected decrease in variable costs
	Expected decrease in fixed costs
	Expected decrease in total costs
		in operating income

Mara Fashions

Income Statement

For the Quarter Ended September 30, 2024

Department

Men's Women's Accessories Total

Net Sales Revenue $106,000 $53,000 $98,000 $257,000

Variable Costs 58,000 30,000 85,000 173,000

Contribution Margin 48,000 23,000 13,000 84,000

Fixed Costs 26,000 16,000 23,000 65,000

Operating Income (Loss) $22,000 $7,000 $(10,000) $19,000

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