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Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution form income statement follows: Sales Variable expenses Contribution
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution form income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,240,000 1,369,000 2,871,000 2,340,000 $ 531,000 Department Hardware Linens $ 3,190,000 $ 1,050,000 960,000 409,000 2,230,000 641,000 1,440,000 900,000 $ 790,000 $ (259,000) A study indicates that $378,000 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 16% decrease in the sales of the Hardware Department. Required: What is the total financial impact of discontinuing the Linens Department? (See below if you need a hint.) X Answer is complete but not entirely correct. Financial (disadvantage) 558,000 X
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