Good afternoon,

Thank you for taking the time to assist me today. Finance and math in general is something I always want to double-check my work with, so with that in mind I'm hoping that you can guide me through the process of solving this exercise the right way to make sure I'm following the process properly, thank you.

The question is "Problem 13-14 Dropping or Retaining a Segment" from "Managerial Accounting, 13th Edition", which is one of My Textbook Solutions.

Problem 13-14 Dropping or Retaining a Segment

Dropping or Retaining a Segment [LO2] Bed&Bath, a retailing company, has two departments, Hardware and Linens. The company's most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $4,000,000 $3,000,000 $1,000,000 Variable expenses 1,300,000 900,000 400,000 Contribution margin 2,700,000 2,100,000 600,000 Fixed expenses 2,200,000 1,400,000 800,000 Net operating income (loss) $500,000 $ 700,000 $ 200,000) A study indicates that $340,000 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 10% decrease in the sales of the Hardware Department Required: If the Linens Department is dropped, what will be the effect on the net operating income of the company as a whole