Answer and Explanation:
The Preparation of analysis showing whether the company should eliminate the gloves and mittens line is shown below:-
Particulars Continue Eliminate Net Income
Increase (Decrease)
Sales $500,000 0 ($500,000)
Variable
expenses $360,000 0 $360,000
Contribution
margin $140,000 0 ($140,000)
Fixed costs $148,000 $36,000 $112,000
Net income ($8,000) ($36,000) ($28,000)
The analysis showing that the Carla Vista Corporation should manufacture gloves and mittens else there loss will be increased by $28,000
