Reference no: EM132545026

The department had an opening inventory of $850,000 at retail that carried a 54% markup.

During this period, the gross purchases of $570,000 at retail were priced with a 56.1% markup.

The freight charges were $8,600.

The merchandise returned to vendors amounted to $16,000 at cost and $30,000 at retail.

Transfers from the misses' sportswear department were $3,500 at cost and $7,800 at retail.

Transfers to the misses' sportswear department were $8,000 at retail with an agreed cost of $3,900.

The gross sales were $720,000; customer returns and allowances were $30,000.

The markdowns taken were 13%, and employee discounts were 1%.

Ashton determined that the petite sportswear department's gross margin and weighed this against the 46.1% gross margin of the misses' department.

In your initial post, address the following:

Should Ashton tell management that this new department should continue as a separate entity? Why or why not? Justify your decision with a mathematical comparison of the petite sportswear department's and the misses' sportswear department's performance.