Homework answers / question archive / Zena Fashion in Charlotte operates three departments: Men's, Women's and Accessories (Click the icon to view additional information) Departmental operating income data for the third quarter of the current year are as follows: Click the icon to view the data

Zena Fashion in Charlotte operates three departments: Men's, Women's and Accessories (Click the icon to view additional information) Departmental operating income data for the third quarter of the current year are as follows: Click the icon to view the data

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Zena Fashion in Charlotte operates three departments: Men's, Women's and Accessories (Click the icon to view additional information) Departmental operating income data for the third quarter of the current year are as follows: Click the icon to view the data.) What should the company do now? More Info - ? First, calculate the relevant operating income from the Shoe Department Zena Fashion Operating Income-Shoe Department Expected revenues Expected expenses Variable expenses Fixed expenses Total expected expenses Expected relevant operating income Zena Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department's square footage. If the company discontinues one of the current departments, it plans to replace the discontinued department with a Shoe Department. The company expects the Shoe Department to produce $77,000 in sales and have $51,000 of variable costs. Because the shoe business would be new to Zena Fashion, the company would have to incur an additional $7,500 of fixed costs (advertising, new shoe display racks, and other fixed costs) per quarter related to the department Print Done Data Table X Zona Fashions Product Line Contribution Margin Income Statement For the Year Product lines Men's Women's Accessories Sales revenue 110,000 $ 50.000 95.000 Variable expenses 56,000 27,000 30.000 Contribution margin $ 54.000 23,000 6,000 $ Les Foued expenses 20.000 20,000 23.000 5 Operating income 3.000 (17000) Company Total 255,000 172.000 83,000 72.000 11.000 Print Done Glla Fashion in Charlotte operates three departments: Men's, Women's, and Accessories Click the icon to view additional information) Departmental operating income data for the third quarter of the current year are as follows: Click the icon to view the data.) What should the company do now? Fiest, calculate the relevant operating income from the Shoe Department $ Gila Fashion Operating Income Shoe Department Expected revenues 81.000 Expected expenses Variable expenses $ 54,000 Foed expenses 27600 Total expected expenses 81.000 $ 1600) Expected relevant operating income Next, let's calculate the contribution margin of the Shoe Department Gita Fashion Product Line Contribution Margin Income Statement For the Year Product lines Men's Women's Accessories Shoes Sales revenue $ 112 000 57.000 95.000 5 81.000 Lessonable expenses 25,000 92.000 54.000 Contribution margin 50 000 3.000 27.000 Under these circumstances, should Gea Fashion drop any of the departments and replace it with a Shoe Department The company should not consider replacing any department with a shoe department because the Shoe Department has a higher contribution margin than the Accessoires department but will incur higher feed costs