question archive Decla Fashions operates three departments: Men's, Women's, and Accessories
Decla Fashions operates three departments: Men's, Women's, and Accessories
Subject:AccountingPrice: Bought3
Decla Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of 2012 are as follows: DEELA FASHIONS Income Statement For the quarter ended September 30, 2012 Department Men's Women's Accessories Total Sales revenue $ 108,000 $ 55,000 $100,000 $ 263,000 Variable expenses 58,000 30,000 92,000 180,000 Fixed expenses 26,000 21,000 26,000 73,000 Total expenses 84,000 51,000 118,000 253,000 Operating income (los) S 24,000 $ 4,000 S (18,000) $ 10,000 Assume that the fixed expenses assigned to each department include only direct fixed costs of the department: Salary of the department's manager • Cost of advertising directly related to that department If Deela Fashions drops a department, it will not incur these fixed expenses. 20 Required: Under these circumstances, should Deela Fashions drop Accessories department? Give your reasoning
