7 points Question 3 A retailer called ABC has two departments, Grocery and Housewares. The following information is given for the most recent month Total Grocery Housewares Sales 2,750,000 ....... 2,000,000 750,000 Variable expenses 850.000 600.000 250.000 Contribution margin 1,900,000 ... 1.400.000 Fixed expenses 1.375.000 ........800.000..........525.000.......... Net operating income loss) 525,000 600.000 (75,000) 500.000 A study indicates that $120,000 of the fixed expenses being charged to Housewares are allocated costs that will continue even if the Housewares department is shut down. In addition, the elimination of the Housewares department will result in a 10% decrease in the sales of the Grocery department If the Housewares department is dropped, what will be the effect on the net operating income of the company as a whole? (You should give a dollar amount and increase/decrease as part of your answer. For example, you might say that "Net operating income of the company would decrease $5.00). TTT Ariel : 3 (120 T.E E