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36 Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution form. income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Department Total Hardware Linens $ 4,100,000 $3,100,000 $1,000,000 1,355,000 943,000 412,000 2,745,000 2,157,000 588,000 2,170,000 1,340,000 830,000 $ 575,000 $ 817,000 $ (242,00) A study indicates that $375,000 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 14% decrease in the sales of the Hardware Department. Financial (disadvantage) Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?

Bed \& Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution forr income statement follows: A study indicates that $375,000 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 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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