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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: Sales Variable expenses Contribution margin

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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: Sales Variable expenses Contribution margin Fixed expenses Total $800,000 320,000 480,000 400,000 $ 80,000 Department A $350,000 120,000 230,000 140,000 $ 90,000 Department B $450,000 200,000 250,000 260,000 $(10,000) Net operating income (loss) The company says that $130,000 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 6%. What is the financial advantage (disadvantage) of discontinuing Department B? Multiple Choice $(128,000) $(124,000) $(153,800) $(133,800)

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