Import Distributors, Inc. (IDI), imported appliances and distributed them to retail appliance stores in the Rocky Mountain states. IDI carried three broad lines of merchandise: audio equipment (tuners, tape decks, CD players, etc.), television equipment (including videotape recorders), and kitchen appliances (refrigerators, freezers, and stoves that were more compact than U.S. models). Each line accounted for about one-third of total IDI sales revenues. Although each line was referred to by IDI managers as a "department," until 1994 the company did not prepare departmental income statements.
EXHIBIT 1

Question
What action should be taken with regard to the television department?

TELEVISION DEPARTMENT Income Statement For the First 3 Months of 1994 Net sales revenues Cost of sales Gross margin Operating expenses: $1,612,403 1,422,473 189,930 Percent 100.0 88.2 11.8 Personnel expenses (Note 1) Department manager's office Rent (Note 2) Inventory, taxes, and insurance Utilities (Note 3) Delivery costs (Note 4/3 Sales commissions (Note 5)/3 Administrative costs (Note 6) Inventory financing charge (Note 7) 10,140 12,393 50,107 37,274 3,006 32,248 80,621 40,310 23,708 289,807 Total operating expenses Income taxes (credit) Net income (loss) 34,957) (64,920) 18.0 (2.2) (4.0)