Question: Help plz I stuck Please put correct answer in the underlined space provided. ABC Company is a discount department store that has three major departments,

Help plz I stuck

Help plz I stuck Please put correct answer in the underlined space

Please put correct answer in the underlined space provided. ABC Company is a discount department store that has three major departments, groceries, genera merchandise and drugs. Management is considering dropping groceries, which have consistently shown = a net loss. The space vacated by the dropping of groceries would remain idle and the common fixed cost would remain the same. The following is the financials for the three departments: Total Groceries Merchandise Drugs Sales 1,900 1,000 800 100 Variable costs 1.420 300 60 S 60 Contribution margin S 480 200 S 240 S 40 Fixed expenses Direct fixed costs 265 150 100 180 60 $ 15 Common fixed costs 100 20 Operating income 35 $ 40 5 Required: a) Compute the change of operating income if the company drop groceries. (4 Marks) b ) Should the company drop groceries? (1 Mark) C) Assume the company wants to use the space made available by the dropping of groceries to expand the general merchandise department. The general merchandise expansion would increase sales and costs as follows: Increase in sales 500 ncrease in direct fixed costs 70 The contribution margin of the increased general merchandise sales remains the same as before the expansion. Required: Compute the change in operating income if the company decides to drop (4 Marks) the groceries department and expand the general merchandise department

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