Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. bed & bath, a retailing company, has two depar

Bed & Bath, a retailing company, has two departmentsHardware and Linens. The companys most recent...

50.1K

Verified Solution

Question

Accounting

Bed & Bath, a retailing company, has two departmentsHardware and Linens. The companys most recent monthly contribution format income statement follows:

Total Department
Hardware Linens
Sales $ 4,180,000 $ 3,170,000 $ 1,010,000
Variable expenses 1,402,000 988,000 414,000
Contribution margin 2,778,000 2,182,000 596,000
Fixed expenses 2,250,000 1,380,000 870,000
Net operating income (loss) $ 528,000 $ 802,000 $ (274,000)

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 Department will result in a 20% decrease in the sales of the Hardware Department.

Required:

What is the financial advantage (disadvantage) of discontinuing the Linens Department?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Algebra
1.2K views

D 4 Perform the operation and write the result in standard form 27 29 28...

Chemistry
1.2K views

A 10.0 mL aliquot of 0.1000 M base B (pKb1= 4.00, pKb2= 9.00) was titrated with...

Accounting
1.2K views

JY investment Ltd holds a well-diversified portfolio of shares that has a market value of $1.5...

Geometry
1.2K views

A rectangle will be rotated 360 about a line which contains the point of intersection...

Basic Math
1.2K views

Complete the square of the given quadratic expression. Then, graph the function using the technique...

Accounting
1.2K views

A machine can be purchased for $240.000 and used for five years. yielding...

Accounting
1.2K views

A report prepared by a government official comparing actual costs to budgeted costs...

Accounting
1.2K views

Examine the five (5) steps to managing accounts receivable. Speculate on the step that is...

Accounting
1.2K views

Additional info: Problem 14-2 (Part Level Submission) Martinez Co. is...

Accounting
1.2K views

Please do not copy from the other chegg answer because it was completely wrong. Please...

Accounting
1.2K views

The City of St. John operates an investment trust fund for neighboring governments, including St....

Accounting
1.2K views

The three primary financial statements, the Balance Sheet, the Income Statement and the Statement of...