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Exercise 13-17(Algo) Dropping or Retaining a Segment [LO13-2] Bed & Bath, a retailing...

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Accounting

Exercise 13-17(Algo) Dropping or Retaining a Segment [LO13-2]
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format
income statement follows:
A study indicates $374,000 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 Department will result in a 12% decrease in the sales of the
Hardware Department.
Required:
What is the financial advantage (disadvantage) of discontinuing the Linens Department?
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