4) Bates Resale, a retail company, Bath, and Kitchen. The companys most recent monthly contribution format income statement follows:

	Total	Bath	Kitchen
Sales	$5,000,000	$1,000,000	$4,000,000
Variable Expenses	1,900,000	300,000	1,600,000
Contribution Margin	3,100,000	700,000	2,400,000
Fixed Expenses	2,700,000	900,000	1,800,000
Net Operating Income	$400,000	$<200,000>	$600,000

A study indicates that $370,000 of fixed expenses being charged to the Bath Department are sunk costs or allocated costs that will continue even if the Bath Department is dropped. In addition, the elimination of the Bath Department would result in a 10% decrease in the CM of the Kitchen Department.

If the Bath Department is dropped, what will be the effect on the NOI of the company as a whole? Complete the table below. Show and label all computations. Be sure to use words and numbers.

Contribution margin lost from Bath Dept
Contribution margin lost from Kitchen Dept*
Total lost contribution margin
Less: Avoidable fixed cost*
Overall decrease (increase) in NOI
*Be sure to show the calculations below