Prior to last year, Leastan Company had not kept departmental income statements. To achieve better management control, the company decided to install department-by-department accounts. At the end of last year, the new accounts showed that although the business as a whole was profitable, the Dry Goods Department had shown a substantial loss. The income statement for the Dry Goods Department, shown here, reports on operations for last year.

LEASTEN COMPANY Dry Goods Department Partial Income Statement
Sales	250,000
Cost of Goods Sold	187,500
Gross Margin		62,500
Marketing and Administrative Costs: Payroll, Direct Labor, and Supervision	16,500
Commissions of Sales Staff	15,000
Rent	13,000
State Taxes	1,500
Insurance on Inventory	2,000
Depreciation	3,500
Administration and General Office	11,000
Interest for Inventory Carrying Costs	2,500
Total Costs		65,000
Loss before Allocation of Income Taxes		(2,500)

Analysis of these results has led management to suggest that it close the Dry Goods Department. Members of the management team agree that keeping the Dry Goods Department is not essential to maintaining good customer relations and supporting the rest of the company's business. In other words, eliminating the Dry Goods Department is not expected to affect the amount of business done by the other departments.

What action do you recommend to management of Leastan Company in the short run? Why?