Review 7-4

Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $503,690, variable expenses of $372,430, and fixed expenses of $140,550. Therefore, the gloves and mittens line had a net loss of $9,290. If Gator eliminates the line, $41,120 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 $ $ $

The analysis indicates that Gator should the gloves and mittens line.