10. A merchandising company has two departments, H and M. A recent monthly income statement for the company is shown below. A study indicates that P340,000 of the fixed expenses being charged to Department M are sunk costs or allocated costs that will continue even if M is dropped. If the elimination of Department M will result to a 10% increase in the sales of Department H. If Department M is dropped, what will be the effect of the net operating income of the company as a whole? 2 points Total Department H Sales P4,000,000 $3,000,000 Less: Variable cost and expenses 1,300,000 900,000 Department M P1,000,000 400,000 Contribution margin $2,700,000 P2,100,000 Less: Fixed cost and expenses 2,200,000 1,400,000 Net operating income/(loss) P500,000 700,000 P 600,000 800,000 ($200,000) Your answer 9. A merchandising company has two departments, H and M. A recent monthly income statement for the company is shown below. A study indicates that $340,000 of the fixed expenses being charged to Department M are sunk costs or allocated costs that will continue even if M is dropped. If Department M is dropped, what will be the effect of the net operating income of the company as a whole? * 2 points Sales Total P4,000,000 Department H P3,000,000 Less: Variable cost and expenses 1,300,000 Contribution margin P2,700,000 Less: Fixed cost and expenses 2,200,000 Net operating income/(loss) P500,000 P 700,000 900,000 P2,100,000 1,400,000 P 600,000 800,000 ($200,000) Department M $1,000,000 400,000 Your answer