Consider Mila Fashion from S8- 5. Assume once again that all fixed costs are unavoidable. If the company discontinues one of the current departments, it plans to replace the discontinued department with a Shoe Department. The company expects the Shoe Department to produce $ 81,000 in sales and have $ 52,000 of variable costs. Because the shoe business would be new to Mila Fashion, the company would have to incur an additional $ 6,800 of fixed costs (advertising, new shoe display racks, and so forth) per quarter related to the department. What should the company do now?
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