choice of products introduction to management accounting 1 17th 403489

6.51 Gulf Coast Fashions sells both designer and moderately price women’s wear in Tampa. Profits have been volatile. Top management is trying to decide which products line to drop. Accountant have reported the following data:

“The store has 8,000 square feet of floor space. If moderately priced goods are sold exclusively. 400 items can be displayed. If designer goods are sold exclusively, only 300 items can be displayed. Moreover, the rate of sale (turnover) of the designer items will be two thirds the rate of moderately price goods.”

1. Prepare and analysis to show which product to drop.

2. What other considerations might affect your decision in number 1?