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Question #2 LL Johns has two product clothing lines, long pants and short pants. The company is not doing as well as management had hoped
Question #2 LL Johns has two product clothing lines, long pants and short pants. The company is not doing as well as management had hoped as noted in the following income statement. Sales 150,000 Normal variable Expenses 90,000 Cumulative fixed Expenses 90,000 Operating Loss (30,000) Additional information: Sales for long pants and short pants are $90,000 and $60,000, respectively. Normal variable expenses for long pants are $45,000. Since short pants is a newer product, the company has been advertising more aggressively. Thus, the traceable cumulative fixed costs for this product line are $60,000. Corporate fixed costs total $10,000. Required: a. What is the impact to operating income if the company were to drop the short pants product line? Show your calculations and reasoning b. Should the company drop the short pants product line? Show your calculations and reasoning
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