Linda Fashion operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of the current year are as follows:

$($Click the icon to view the data.$)$

Assume that the fixed expenses assigned to each department include only direct fixed costs of the department $($rather than unavoidable fixed costs$)$:

Salary of the department's manager

Cost of advertising directly related to that department

If Linda Fashion discontinues a department, it will not incur these fixed expenses. Under these circumstances, should Linda Fashion discontinue any of the departments? Give your reason.

Complete the following analysis to determine the increase or decrease in operating income of dropping the Accessories Department, the only department showing an operating loss this quarter.

Incremental Analysis for Discontinuation Decision

Contribution margin lost if Accessories is discontinued

Less: Fixed cost savings if Accessories is discontinued

Operating income if Accessories is discontinued

Under these circumstances, should Linda Fashion drop any of the department

Decision: Linda Fashion

Data table

$\backslash$table$[[4,,$Product lines,,$],[5,,$Men's,Women's,Accessories,Company Total$],[6,$Sales revenue,$$,109,000,$$$,52,000,$$$,98,000,$$$,259,000],[$:$\text{'},\backslash$table$[[$Less: Variable$],[$expenses$]],,60,000,,28,000,,90,000,,178,000],[8,$Contribution margin,$$,49,000,$$$,24,000,$$$,8,000,$$$,81,000],[9,\backslash$table$[[$Less: Fixed$],[$expenses$]],,25,000,,21,000,,25,000,,71,000],[10,$Operating income,$$,24,000,$$$,3,000,$$$,(17,000),$$$,10,000]]$