* More Info Linda Fashion in Pittsburgh operates three departments: Men's, Women's, and Accessories. (Click the icon to view additional information.) Departmental operating income data for the third quarter of the current year are as follows: E! (Click the icon to view the data.) Linda Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department's square footage. If the company discontinues one of the current departments, it plans to replace the discontinued department with a Shoe Department. The company expects the Shoe Department to produce $85.000 in sales and have $54,000 of variable costs. Because the shoe business would be now to Linda Fashion, the company would have to incur an additional $6.800 of fixed costs (advertising, new shoe display racks, and other fixed costs) per quarter related to the department. Print Done What should the company do now? Linda Fashion Operating Income-Shoe Department Expected revenues Expected expenses: Variable expenses Fixed expenses Total expected expenses Expected relevant operating income Next, let's calculate the contribution margin of the Shoe Department Enter any number in the edit fields and then continue to the next question Linda Fashions Product Line Contribution Margin Income Statement For the Year Product lines Sales revenue Men's 107,000 $ 52,000 Women's Accessories 54,000 $ 99,000 $ 26,000 95.000 Company Total 260,000 173,000 Less: Variable expenses Contribution margin Less: Fixed expenses 55,000 $ 23,000 32,000 $ 28,000 $ 19,000 4,000 $ 27,000 (23,000) $ 87,000 69,000 9,000 $ 18,000 Operating income Print Done Product lines Men's Women's Shoes Sales revenue 107,000 $ 52,000 54,000 $ 26,000 Accessories 99,000 95,000 Less variable expenses Contribution margin 55,000 28,000 4,000 Under these circumstances, should Linda Fashion drop any of the departments and replace it with a Shoe Department? The company should because