2.) Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribu

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2.)
Bed & Bath, a retailing company, has twodepartments—Hardware and Linens. The company’s most recent monthlycontribution format income statement follows:
A study indicates that $380,000 of the fixed expenses beingcharged to Linens are sunk costs or allocated costs that willcontinue even if the Linens Department is dropped. In addition, theelimination of the Linens Department will result in a 12% decreasein the sales of the Hardware Department.
Required:
What is the financial advantage (disadvantage) of discontinuingthe Linens Department?