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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
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) Asume that the feed expenses assigned to each department include only directed costs of the department (rammer than tavoidable tred Costa) Salary of the department's manager Cont of advertising directly related to that department Linda Fashion discontinuen a desartment, I will not incur these fived ones. Under there couturom, hould Linda Fashion discontrary of the department? Cive 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 kots this quarta Incremental Analysis for Discontinuation Decision Total Contribution margin lost it Accessories is discontinued Less: Fixed cost savings Aconseries is discontinued Operating income Accessories is discontinued med to each dep Data table - X that department ment, it will not ermine the incre Iscontinuation is discontinued is discontinued D E 1 Linda Fashions 2 Product Line Contribution Margin Income Statement 3 For the Year Product lines 5 Men's Women's Accessories Company Total & Sales revenue $ 100.000 $ 52,000 $ 101.000 $ 262.000 7 Less: Variable expenses 62.000 29.000 90,000 181,000 8 Contribution margin $ 47,000 $ 23,000 $ 11,000 $ 81,000 25.000 20,000 9 Less: Fixed expenses 25,000 70,000 $ 22.000 $ 3,000 $ (14000) 11.000 10 Operating income cessories is disco Print Done
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