Bed & Bath, a retailing company, has two departmentsHardware and Linens. The companys most recent monthly contribution format income statement follows:

				Department
	Total			Hardware			Linens
Sales	$	4,300,000		$	3,180,000		$	1,120,000
Variable expenses		1,382,000			964,000			418,000
Contribution margin		2,918,000			2,216,000			702,000
Fixed expenses		2,240,000			1,380,000			860,000
Net operating income (loss)	$	678,000		$	836,000		$	(158,000	)

A study indicates that $372,000 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 13% decrease in the sales of the Hardware Department.

Required:

What is the financial advantage (disadvantage) of discontinuing the Linens Department?

Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Tixed expenses Department Total Hardware Linens $ 4,300,000 $3,180,000 $1,120,000 1,382,000 964,000 418,000 2,918,000 2,216,000 702,000 2,240,000 1,380,000 860,000 $ 678,000 $ 36,000 $ 158,000) Net operating income (10ss) A study indicates that $372,000 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 13% decrease in the sales of the Hardware Department Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)