Example $3$:

Champion Apparel Co$.$ has an apparel line within their organization that reported the following

information for the year:

Construct a contribution format income statement to show the company's operating loss.

Variable costs and direct fixed costs are avoidable $($amounts the company would not

incur if it eliminated the segment$),$ and $40\%$ of indirect fixed costs are avoidable. Based

on this information, should the apparel line be eliminated? Using incremental analysis

explain the best alternative for this problem.