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10 Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Print Variable
10 Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Print Variable expenses Contribution margin Pixed expenses Net operating income (loss) Department Total Hardware Liners $ 4,060,000 $3,030,000 $1,030,000 1,258,000 857,000 401,000 2,802,000 2,173,000 629,000 2,240,000 1,390,000 850,000 $ 562,000 $ 783,000 $ (221,000) A study indicates that $375,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 17% decrease in the sales of the Hardware Department Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department
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