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Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line: $3,025,000 1,421,750 1,683, 250 Sales Less: Variable expenses Contribution margin
Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line: $3,025,000 1,421,750 1,683, 250 Sales Less: Variable expenses Contribution margin Less: Fixed expenses: Wages Insurance on Inventory Advertising Net operating income (loss) $1,689,000 60,500 665,500 1,815,000 $ (211,750) Management is concerned about the loss and is considering dropping the product line. If the product line is dropped, a job has to be created elsewhere for a long-term employee currently earning an annual salary of $90.750. Required: Calculate the increase or decrease in the operating Income in both alternatives Keep Accesories Product Line Drop Accesories Product Line Sales Less: Variable expenses Contribution margin Fixed expenses Add Wages expenses Addrerance on in Add Advertising expenses Net operating income (los)
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