Bed & Bath, a retailing company, has two departments, Hardware and Linens. The companys most...
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Bed & Bath, a retailing company, has two departments, Hardware and Linens. The companys most recent monthly contribution format income statement follows:
Department Sales Variable expenses Total Hardware Linens $4,300,000 $3,150,000 $1,150,000 1,268,000 851,000 417,000 Contribution margin Fixed expenses 3,032,000 2,299,000 733,000 2,180,000 1,370,000 810,000 Net operating income (loss) 852,000 S 929,000 $ (77,000) A study indicates that $378,000 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 Required If the Linens Department is dropped, what will be the effect on the net operating income of the company as a whole? in net operating income
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