The ABC department store has three major product lines: hardware, clothing, and sporting goods. The store is considering dropping the clothing line because the income statement shows that it is operating at a loss. Note the income statement for these product lines below:

Hardware Clothing Sporting Goods Total Sales $10,000 $15,000 $25,000 $50,000 Less: Variable costs $6,000 $8,000 $12,000 $26,000 Contribution Margin $4,000 $7,000 $13,000 $24,000 Less: Fixed costs Direct $2,000 $6,500 $4,000 $12,500 Allocated $1,000 $1,500 $2,500 $5,000 Total fixed costs $3,000 $8,000 $6,500 $17,500 Net Income $1,000 ($1,000) $6,500 $6,500

Should the store drop the clothing line of business? Explain using the sales and cost data above.