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Exercise 13-17 (Algo) Dropping or Retaining a Segment (L013-2] Bed & Bath, a retailing company, has two departments --Hardware and Linens. The company's most recent

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Exercise 13-17 (Algo) Dropping or Retaining a Segment (L013-2] Bed & Bath, a retailing company, has two departments --Hardware and Linens. The company's most recent monthly contribution forma Income statement follows: Total Department Hardware Linens Sales $4,000,000 $ 3,060,000 $ 1,020,000 Variable expenses 1,320,000 910.000 410.000 Contribution margin 2,760,000 2,150,000 610,000 Fixed expenses 2,270,000 1,400,000 570,000 Niet operating income (los) $ 490,00 $750,000 $(260,000) A study indicates that $380,000 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 17% decrease in the sales of the Hardware Department Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department

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