Question 4

Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $495,000, variable expenses of $363,000, and fixed expenses of $148,000. Therefore, the gloves and mittens line had a net loss of $16,000. If Gator eliminates the line, $39,000 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Continue		Eliminate		Net Income Increase (Decrease)
Sales		$		$		$
Variable costs
Contribution margin
Fixed costs
Net income / (Loss)		$		$		$

The analysis indicates that Gator should

eliminate/not eliminate

the gloves and mittens line.