1. Flora, Inc. is a retailing company with two departments Department A and Department B. The companys most recent contribution margin income statement for Department A is as follows:

Sales $350,000

Variable expenses $250,000

Contribution margin $100,000

Fixed expenses $140,000

Net operating income (loss) $(40,000)

The company says that $80,000 of the fixed expenses being charged to Department A are avoidable if the segment is discontinued. What is the financial advantage (disadvantage) of discontinuing Department A?