question 1

Exercise 13-17 (Algo) Dropping or Retaining a Segment [LO13-2] Bed \& Bath, o retaling company, has two departments - Hardware and Linens. The company's most recent monthly contribution format income statement follows: A study indicates $379,000 of the foxed 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 (disadvantage) of discontinuing the Linens Department