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Assume a retailing company has two departments Department A and Department B . The company s most recent contribution format income statement follows: Total Department
Assume a retailing company has two departmentsDepartment A and Department B The companys most recent contribution format income statement follows:
Total Department A Department B
Sales $ $ $
Variable expenses
Contribution margin
Fixed expenses
Net operating income loss $ $ $
The company says that $ of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by What is the financial advantage disadvantage of discontinuing Department B
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