8 S8-6 Decide whether to discontinue a department (Learning Objective 4) Devine Fashion in Chicago operates three departments: Men's, Women's, and Accesso- ries. Devine Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department's square footage. Departmental operating income data for the third quarter of the current year are as follows: C D E Devine Fashions Product Line Contribution Margin Income Statement 3 For the Year 4 5 Product lines 6 Men's Women's Accessories Company Total 7 Sales revenue $ 105,000 $ 52,000 $ 101,000 $ 258,000 8 Less: Variable expenses 58,000 28,000 90,000 176,000 9 Contribution margin 47,000 24,000 11,000 82,000 10 Less: Fixed expenses 25,000 22,000 26,000 73,000 11 Operating income Ur 22,000 $ 2,000 $ (15,000) 9,000 12 The store will remain in the same building regardless of whether any of the depart- ments are discontinued. Should Devine Fashion discontinue any of the departments? Give your reason. ment: Revised information (Learning Objective 4)