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Discontinue? Chapter 8: Dropping a product line The managers at...

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Accounting

Discontinue?
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Chapter 8: Dropping a product line The managers at Manchester's Department Store are concerned about the operation of its sporting goods department, which has not been very successful. The following condensed income statement gives the latest year's results: Manchester Department Store Contribution Margin Income Statement For the Year Ended December 31 Product Lines Sporting Goods $480,000 $385,000 $95,000 All Other Departments $2,400,000 $1,560,000 $840,000 Totals Sales Revenue $2,880,000 $1.945,000 $935,000 Less: Variable Costs: Contribution Margin Less: Fixed Costs Manufacturing OH Marketing & Admin. Operating Income (loss) $77,500 $48,000 $(30,500) $336,000 $240,000 $264,000 $413,500 $288,000 $233,500 none of the fixed costs can be avoided, should Manchester discontinue the sporting goods department

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