Hawkeye Golf is considering dropping the clothing department because it is not generating a profit as disclosed by the following data:
$$\begin{array} { l r }
\text { Sales } & \$ 1,800 \
\text { Cost of Goods Sold } & \$ \underline { 800 } \
\text { Gross Profit } & \$ 1,000 \
\text { Direct Expenses } & 700 \
\text { Contribution Margin } & 300 \
\text { Indirect Expenses } & ( \underline { 500 } ) \
\text { Net Loss } & \$ ( 200 )
\end{array}$$
Note: None of the indirect expenses can be avoided by dropping the department.
Should Hawkeye drop the department? Show your computations.

Question

Hawkeye Golf is considering dropping the clothing department because it is not generating a profit as disclosed by the following data:
 $$\begin{array} { l r } 
\text { Sales } & \$ 1,800 \
\text { Cost of Goods Sold } & \$ \underline { 800 } \
\text { Gross Profit } & \$ 1,000 \
\text { Direct Expenses } & 700 \
\text { Contribution Margin } & 300 \
\text { Indirect Expenses } & ( \underline { 500 } ) \
\text { Net Loss } & \$ ( 200 )
\end{array}$$ 
Note: None of the indirect expenses can be avoided by dropping the department.
Should Hawkeye drop the department? Show your computations.

Quizplus · Accepted Answer

The Answer of Hawkeye Golf is considering dropping the clothing department because it is not generating a profit as disclosed by the following data:
 $$\begin{array} { l r } 
\text { Sales } & \$ 1,800 \
\text { Cost of Goods Sold } & \$ \underline { 800 } \
\text { Gross Profit } & \$ 1,000 \
\text { Direct Expenses } & 700 \
\text { Contribution Margin } & 300 \
\text { Indirect Expenses } & ( \underline { 500 } ) \
\text { Net Loss } & \$ ( 200 )
\end{array}$$ 
Note: None of the indirect expenses can be avoided by dropping the department.
Should Hawkeye drop the department? Show your computations.

Hawkeye Golf Is Considering Dropping the Clothing Department Because It