Boyles home center a retailing company has two departments

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Boyle's Home Center, a retailing company, has two departments, Bath and Kitchen. The company's most recent monthly contribution format income statement follows:



Department


Total Bath Kitchen
  Sales $ 4,300,000
$ 1,120,000
$ 3,180,000
  Variable expenses
1,300,000

407,000

893,000










  Contribution margin
3,000,000

713,000

2,287,000
  Fixed expenses
2,240,000

800,000

1,440,000










  Net operating income (loss) $ 760,000
$ (87,000 ) $ 847,000











A study indicates that $379,000 of the fixed expenses being charged to the Bath Department are sunk costs or allocated costs that will continue even if the Bath Department is dropped. In addition, the elimination of the Bath Department would result in a 16% decrease in the sales of the Kitchen Department.

Required:

If the Bath Department is dropped, what will be the effect on the net operating income of the company as a whole? (Input the amount as a positive value. Omit the "$" sign in your response.)

Reference no: EM13569452

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