Exercise 12-17 Dropping or Retaining a Segment [LO12-2) Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows Department Hardvare Linens Total 4,230,000 $3,080,000 $1,150,000 Sales Variable expensers Contribution margin Fixed expenses Net operating income (loss) 1,291,000 889,000 2937,000 2,192,000 404, 000 746,000 2,130,000 1,300,000830,000 807,000 $ 891,000 (84,000) A study indicates that $377000 of the fixed expenses being charged to Linens are sunk costs or allocated costs t even if the Linens Department is dropped. In addition, the elimination of the Linens Depart ment will result in a 14% decrease in the sales of the Hardware Department Required What is the financial advantage (disadvantage) of discontinuing the Linens Department? 3 Answer is complete but not entirely correct. Financial (disadvantage) s 318,730