Question: Exercise 12-17 Dropping or Retaining a Segment (L012-2] 1,66 points Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent
Exercise 12-17 Dropping or Retaining a Segment (L012-2] 1,66 points Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: ebook Sales Variable expenses Contribution margin Fixed expenses Net operating income (los) Department Total Hardware Linen $ 4,910,000 $3,140,000 $1,170,000 1, 339,000 924,000 415,000 2.971.000 2.216,000 755,000 2.300.000 1.470.000 830,000 $ 521.000 746.000 $ 75,000) ferences A study indicates that $377000 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 19% decrease in the sales of the Hardware Department Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department
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