=+On the basis ofthe following data, the general manager of Feet to Go Inc. decided to discon¬

tinue Children’s Shoes because it reduced income from operations by $26,000. What is the flaw in this decision?

FEET TO GO INC.

Product-Line Income Statement For the Year Ended August 31, 2008 Sales Costs of goods sold:

Variable costs Fixed costs Total cost of goods sold Gross profit Selling and administrative expenses:

Variable selling and admin, expenses Fixed selling and admin, expenses Total selling and admin, expenses Income (loss) from operations Children’s Shoes Men’s Shoes Women’s Shoes Total

$ 150,000 $300,000 $500,000 $950,000

$ 90,000 $150,000 $220,000 $460,000 40,000 60,000 120,000 220,000

$ 130,000 $210,000 $340,000 $680,000

$ 20,000 $ 90,000 $160,000 $270,000

$ 30,000 $ 45,000 $ 95,000 $170,000 16,000 20,000 25,000 61,000

$ 46,000 $ 65,000 $120,000 $231,000

$(26,000) $ 25,000 $ 40,000 $ 39,000