ABC Company is a discount department store that has three major departments, groceries, general
	merchandise and drugs. Management is considering dropping groceries, which have consistently shown
	a net loss. The space vacated by the dropping of groceries would remain idle and the common fixed
	cost would remain the same.
	The following is the financials for the three departments:
					Total	Groceries	Merchandise	Drugs
	Sales				$ 1,900	$ 1,000	$ 800	$ 100
	Variable costs				$ 1,420	$ 800	$ 560	$ 60
	Contribution margin				$ 480	$ 200	$ 240	$ 40
	Fixed expenses
	Direct fixed costs				$ 265	$ 150	$ 100	$ 15
	Common fixed costs				$ 180	$ 60	$ 100	$ 20
	Operating income				$ 35	$ (10)	$ 40	$ 5
	Required:
a)	Compute the change of operating income if the company drop groceries.					(4 Marks)

b)

Should the company drop groceries?

(1 Mark)