What impact will occur to Diva Footwear net income

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Reference no: EM132810978

Question - Diva Footwear is contemplating if it should continue producing platform shoes. The following information is available for the company's 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, sales of athletic shoes are expected to drop by 10%. What impact will occur to Diva Footwear's net income?

Reference no: EM132810978

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