Question: Diva Footwear is contemplating if it should continue producing platform shoes. The following information is available for the company's segments. Platform Shoes Athletic Shoes
Diva Footwear is contemplating if it should continue producing platform shoes. The following information is available for the company's segments. Platform Shoes Athletic Shoes Boots Sales $120,000 $420,000 $360,000 Variable costs 64,000 220,000 140,000 Contribution margin 56,000 200,000 220,000 Direct fixed costs 42,000 70,000 90,000 Allocated fixed costs 20,000 70,000 60,000 Net income ($ 6,000) $ 60,000 $ 70,000 If platform shoes are dropped, what effect will occur to Diva Footwear's net income? Increase by $9,000 Decrease by $14,000 Decrease by $11,000 Increase by $56,000 Increase by $14,000 0
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