Sophistication Corner sells clothing, shoes, and accessories at a suburban location in Boston. Sophistication Corner is a private firm, and hence relies on Variable Costing Net Income for its reporting. However, it incurs fixed costs that are shared across its three departments and management allocates fixed costs to its three departments based on direct labor hours. Information for the just-concluded fiscal year follows.

	Clothing	Shoes	Accessories	TOTAL
Sales	$850,000.00	$320,000.00	$150,000.00	$1,320,000.00
Less: Variable cost	$425,000.00	$272,000.00	$82,500.00	$779,500.00
Contribution Margin (CM)	$425,000.00	$48,000.00	$67,500.00	$540,500.00
Allocated Fixed Costs	$289,000.00	$67,200.00	$39,000.00	$395,200.00
Operating Income / (Loss)	$136,000.00	-$19,200.00	$28,500.00	$145,300.00

Management is considering a major restructuring of its operations. Management has noticed that Shoes is incurring a loss and Accessories has the highest operating income as a percentage of sales. Accordingly, management is considering a New Plan, key elements of which would include the following: 1. Drop Shoes as a product line. 2. Devote the space for Shoes as well as additional space that will be newly rented to Accessories. 3. The rental cost for the new space will be an additional $16,000 per year. 4. Management will be able to reduce its workforce by one senior sales personnel who specialized in Shoes. Sophistication pays each of its senior salespersons a salary of $60,000 per year. No other changes in sales personnel are expected. 5. As a result of its efforts, management expects that the dollar sales of Accessories will double starting the next year. 6. One drawback of this plan is that customers that visit the Clothing department of Sophistication often purchase shoes and feel strongly about "one-stop shopping". Consequently, if the Shoes department is closed, even with the expansion of Accessories, Clothing sales are expected to fall by 16%. 7. Irrespective of dollar volume of sales after dropping Shoes, contribution margin ratios (CMRs) on Accessories and Clothing are expected to remain the same. A. What is expected the total dollar contribution margin of the Clothing department under the New Plan?

Dollar contribution margin (Clothing) under the New Plan: ?

B. What is the expected total dollar contribution margin of the Accessories department under the New Plan?

Dollar contribution margin (Accessories) under the New Plan: ?

C. What are Sophistication Corner's total fixed costs under the New Plan?

Fixed Costs under New Plan:?

D. By how much will Sophistication Corner's total Operating Income change under the New Plan relative to last year?

Change in income: ?

Is it Decreased or Increased?