Total Kids'Kids' SneakersShoes

Sales revenue$850,000$580,000$270,000

Cost of goods sold

Variable220,000116,000104,000

Fixed290,000184,000106,000

Total cost of goods sold510,000300,000210,000

Gross margin340,000280,00060,000

Marketing and

administrative expenses

Variable140,00058,00082,000

Fixed105,00079,00026,000

Total marketing and

administrative expenses245,000137,000108,000

Operating income (loss)$95,000$143,000$(48,000)

Management is considering dropping the kids' shoes product line. Accountants for the company estimate that dropping the kids' shoes line will decrease fixed costs of goods sold by $60,000 and fixed marketing and administrative expenses by $20,000.

Should the kids line be dropped?