Q5

Bed \& Bath, a retalling company, has two departments - Hardware and Linens. The company's most recent monthly coritibution format income statement follows: A study indicates that $373,000 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 11% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department