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value: 10.000 points Bed & Bath, a retailing company, has two departments, Hardware and Linens. The company's most recent monthly contribution format income statement follows
value: 10.000 points 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 $4,210,000 $3,020,000 $1,190,000 Sales 1,245,000 842,000 403,000 Variable expenses Contribution margin 2,965,000 2,178,000 787,000 2,260,000 1,380,000 880,000 Fixed expenses 705,000 798,000 (93,000) Net operating income (loss) Astudy indicates that $372,000 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 20% 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? n net operating income
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