Question: View previous Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Department Total

 View previous Bed & Bath, a retailing company, has two departments-Hardware

View previous Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4, 180, 000 $ 3, 160, 000 $ 1, 020, 000 Variable expenses 1, 394, 000 988 , 090 406, 000 Contribution margin 2, 786, 000 2, 172, 000 614, 000 Fixed expenses 2, 240, 000 1, 410, 000 830, 000 Net operating income (loss) $ 546, 000 $ 762, 060 (000 912) $ A study indicates that $377,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue ces 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? Financial (disadvantage)

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