Score: 0 of 1 pt S25-4 (similar to) Zena Fashions operates three departments: Me

ID: 2572681 • Letter: S

Question

Score: 0 of 1 pt S25-4 (similar to) Zena Fashions operates three departments: Men's, Wonen's, and Accessories. Departmental operating income data for the third quarter of 2018 are as tollows: 3011002 complete) HY Score: 20%, 2 of 10 pts Question Help (Click the icon to vew aouitional information.) (Click the loon to view the data.) I Zena Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should Zena Fashions drop any of the departments? Give your reasoning Begin by completing the following analysis to determine the increase or decrease in operating income from dropping the Accessories Department, the only Department showing an operating loss the quarter. (Enter decreases to profits with a parentheses or minus sign.) Zena Fashions Analysis of Dropping the Accessories Department Expected decrease in revenues Expected decrease in costs Expected decrease in variable costs Expected decrease in fixed costs Expected decrease in total costs in operating income Choose from any list or enter any number in the input fields and then click Check Answer part Clear All Check

Explanation / Answer

Zena Fashions

Analysis of dropping the Accessories Department:

Analysis of Dropping the Accessories Department

Expected decrease in revenues

$96,000

Expected decrease in costs:

Expected decrease in variable costs

$90,000

Expected decrease in fixed costs

$26,000

Expected decrease in total costs

$116,000

Expected Increase in operating income

$20,000

Based on the above analysis dropping the Accessories Department would increase the operating income by $20,000. Hence, Zena Fashions should drop the Accessories Department.

Note: