Question: Diva Footwear is contemplating if it should continue producing platform shoes. The following information is available for the companys segments. Platform Shoes Athletic Shoes Boots
Diva Footwear is contemplating if it should continue producing platform shoes. The following information is available for the companys segments.
Platform Shoes Athletic Shoes Boots
Sales $120,000 $420,000 $360,000
Variable costs 64,000 220,000 140,000
Contribution margin 56,000 200,000 220,000
Direct fixed costs 45,000 70,000 90,000
Allocated fixed costs 20,000 70,000 60,000
Net income ($ 9,000) $ 60,000 $ 70,000
If platform shoes are dropped, what effect will occur to Diva Footwears net income?
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