Mila 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:

	A	B	C	D	E
1	Mila Fashions
2	Product Line Contribution Margin Income Statement
3	For the Year
4		Product lines
5		Men's	Women's	Accessories	Company Total
6	Sales revenue	$110,000	$56,000	$103,000	$269,000
7	Less: Variable expenses	62,000	32,000	88,000	182,000
8	Contribution margin	$48,000	$24,000	$15,000	$87,000
9	Less: Fixed expenses	26,000	21,000	25,000	72,000
10	Operating income	$22,000	$3,000	$(10,000)	$15,000

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 Mila Fashion discontinues a department, it will not incur these fixed expenses. Under these circumstances, should Mila 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			Total
Contribution margin lost if Accessories is discontinued
Less: Fixed cost savings if Accessories is discontinued
Operating income		if Accessories is discontinued