Question

Gila Fashions operates three departments: Men’s, Women’s, and Accessories. Departmental operating income data for the third quarter of 2016 are as follows:
Assume that the fixed costs assigned to each department include only direct fixed costs of the department:
• Salary of the department’s manager
• Cost of advertising directly related to that department
If Gila Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should Gila Fashions drop any of the departments? Give your reasoning.


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  • CreatedJune 15, 2015
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