Niklos Boot Co. sells mens, womens, and childrens boots. For each type of boot sold, it operates

Niklos Boot Co. 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. 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 $20,000. Would this information affect the decision that you made in Requirement a? Explain youranswer.

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Men's Department Children's Department Department Women's $600,000 (210,000) 250,000 70,000) 350,000 (60,000) (98,000) (21,000) (4,000) 4,000) 4,000) 127000 167000(17,000) $120,000 Sales Cost of goods sold Gross margin Department managers salary Sales commissions Rent on store lease Store utilities S500,000 290,000 (52,000) (86,000) (21,000) 50,000 (24,000) (18,000) (21,000) Net income (loss)