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Exercise 11-17 Dropping or Retaining a Segment (LO11-2] Bed & Bath, a retailing company has two departments-Hardware and Line
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Answer #1
Loss of contribution margin of Linens Department 756000
Loss of contribution margin of Hardware Department 317400
(15% x $2116000)
Total contribution margin lost 1073400
Less: Savings in avoidable fixed costs of Linen Department 526000
($900000 - $374000)
Decrease in total profits $ 547400

Financial (disadvantage): $547,400

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