n wuuld decline E12-5 Decision to discontinue a product On the basis of the following data, the general manager of Sandals Industries Inc. decide o discontinue Children's Sandals because it reduced operating income by $65,000. What is the flaw in this decision? SANDALS INDUSTRIES INC. Product-Line Income Statement Women's Men's San- Sandals Children's Total Sandals $400,000$1.200,000 $1,100,000 2,700,000 $(240,000) $(620,000) $(580,000) $(1,440,000) dals Sales Costs of goods sold: Variable costs Fixed costs (100,000)(300,000) (300,000) (700,000) $(340,000) (920,000) $(880.000) $(2,140,000) Total cost of goods sold 60,000280,000 $220,000 560,000 Gross profit Selling and administrative expenses: Variable selling and admin. expenses $ (75,000) Fixed selling and admin. expenses Total selling and admin. expenses (120,000) $(100,000) (100,000) (295,000) (230,000) (80,000) (50,000) $(125,000) s (65.000) 60,000 40,000 (220,000) (180,000) (525,000) 35,000 Operating income (loss)