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Vernon Boot Company sells men's, women's, and children's boots. For each type of boot sold,...

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Accounting

Vernon Boot Company sells men's, women's, and children's boots. For each type of boot sold, it operates a separate department that
has its own manager. The manager of the men's department has a sales staff of nine employees, the manager of the women's
department has six employees, and the manager of the children's department has three employees. All departments are housed in a
single store. In recent years, the children's department has operated at a net loss and is expected to continue to do so. Last year's
income statements follow.
Required
a. Calculate the children's department's contribution to profit. Determine whether to eliminate the children's department.
b. Confirm the conclusion you reached in Requirement a by preparing income statements for the company as a whole with and without
the children's department.
c. Eliminating the children's department would increase space available to display men's and women's boots. Suppose management
estimates that a wider selection of adult boots would increase the store's net earnings by $49,000. Would this information affect the
decision that you made in Requirement a?
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