Exercise 12-17 Dropping or Retaining a Segment [LO12-2] Bed & Bath, a retailing company, has...
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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 Tota Hardware Sales Varlable expenses Contribution margitn Fixed expenses Net operating incone (loss) 4,240, 9ee 3,180,00 905,800 2,926,800 2,275,800 2,180,000 1,330,000 1,060,080 409,000 651,000 850,800 1,314,0e0 746,000 $ 945,000% (199,000) A study indicates that $377000 of the fixed expenses being charged to Linens are sunk costs or allocated cos even if the Linens Department is dropped. In addition, the elimination of the Linens Department 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
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