Exercise $11-17($Algo$)$ Dropping or Retaining a Segment $[$LO$11-2]$

Bed & Bath, a retailing company, has two departments$-$Hardware and Linens. The company's most recent monthly contribution format

income statement follows:

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 $12\%$ decrease in the

sales of the Hardware Department.

Required:

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