S8-5 Decide whether to discontinue a department (Learning Objective 4) Mila Fashion in New York...
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S8-5 Decide whether to discontinue a department (Learning Objective 4) Mila Fashion in New York operates three departments: Men's, Women's, and Accessories. Mila Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department's square footage. Departmental operating income data for the third quarter of the current year are as follows: WN Mila Fashions Product Line Contribution Margin Income Statement For the Year 6 7 Sales revenue 8 Less: Variable expenses 9 Contribution margin 10 Less: Fixed expenses 11 Operating income 12 Men's 109,000 59,000 50,000 24,000 26,000 Product lines Women's $ 56,000 30,000 26,000 18,000 8,000 Accessories $ 98,000 90,000 8,000 25,000 $ (17,000) Company Total $ 263,000 179,000 84,000 67,000 17,000 ulu uuestes The store will remain in the same building regardless of whether any of the depart- ments are discontinued. Should Mila Fashion discontinue any of the departments? Give your reason
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