Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly...
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Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows Department Total Linens $1,040, 000 415,000 625,000 800, 000 $ (175, 00) Hardware Sales Varlable expenses Contribution margin $ 4,110,000 1,412,09 2,698,000 2,250, 000 $ 3,070,000 997,800 2,073,00 1,458, D00 $ 623,000 Fixed expenses Net operating incone (loss) A study indicates that $378.000 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 15% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantagef of discontinuing the Linens Department? Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows Department Total Linens $1,040, 000 415,000 625,000 800, 000 $ (175, 00) Hardware Sales Varlable expenses Contribution margin $ 4,110,000 1,412,09 2,698,000 2,250, 000 $ 3,070,000 997,800 2,073,00 1,458, D00 $ 623,000 Fixed expenses Net operating incone (loss) A study indicates that $378.000 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 15% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantagef of discontinuing the Linens Department?
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disadvantage Answer Financial advantage disadvantage 5139... View the full answer
Related Book For
Managerial accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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