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what is the financial disadvantage of discounting the linens department 5 Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most

what is the financial disadvantage of discounting the linens department

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5 Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent month income statement follows: Department Total Hardware Linens 30 Sales $ 4, 150, 000 $ 3,020, 000 $ 1, 130,090 points Variable expenses 1, 389, 090 970, 060 419, 600 Contribution margin 2, 761, 060 2, 050,000 711, 000 01:07:36 Fixed expenses 2, 280, 000 1, 390, 090 890, 090 Net operating income (loss) $ 481, 060 $ 660, 090 $ (179,000) A study indicates that $377,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs th even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 16% sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)

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