Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $500,000, variable expenses of $370,000, and fixed expenses of $150,000. Therefore, the gloves and mittens line had a net loss of $20,000. If Gator eliminates the line, $38,000 of fixed costs will remain.
Prepare an analysis showing whether the company should eliminate the gloves and mittens line.