question archive Prepare an analysis to determine whether the ladies' shoe department should be dropped, and make a recommendation to management about this decision
Prepare an analysis to determine whether the ladies' shoe department should be dropped, and make a recommendation to management about this decision
Subject:AccountingPrice: Bought3
Prepare an analysis to determine whether the ladies' shoe department
should be dropped, and make a recommendation to management about this decision.
Sales $1,500,000
Less: variable expense 700,000
Contribution margin 800,000
Less: fixed expenses:
Wages $550,000
Insurance on inventory 20,000
Advertising 200,000 770,000
Net operating income $ 30,000
Management is considering dropping the department entirely. If the department is dropped, a job has to be created elsewhere for one employee who has been with the firm for many years. This employee has an annual salary of $40,000 and many years until retirement.
