YKQOUC251 Corporation has two departments, Toys and Candy. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution Margin Fixed Expenses Net operating income (loss) Total Candy. $4,200,000 $3,000,000 $1,200,000 2,000,000 1,500,000 500,000 2,200,000 1,500,000 700,000 2,200,000 1,300,000 900,000 200,000 (200,000) 0 Department Toys A YKQOUC251's study indicates that $300,000 of the fixed expenses being charged to the Candy Department are sunk costs or allocated costs that will continue even if the Cand is dropped. In addition, the elimination of the Candy Department will result in a 20% decrease in the sales of the Toys Department. Q: If the Candy Department is dropped, what will be the effect on the net operating income of the YKQOUC251 Corporation as a whole?
YKQOUC251 Corporation has two departments, Toys and Candy. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution Margin Fixed Expenses Net operating income (loss) Total Candy. $4,200,000 $3,000,000 $1,200,000 2,000,000 1,500,000 500,000 2,200,000 1,500,000 700,000 2,200,000 1,300,000 900,000 200,000 (200,000) 0 Department Toys A YKQOUC251's study indicates that $300,000 of the fixed expenses being charged to the Candy Department are sunk costs or allocated costs that will continue even if the Cand is dropped. In addition, the elimination of the Candy Department will result in a 20% decrease in the sales of the Toys Department. Q: If the Candy Department is dropped, what will be the effect on the net operating income of the YKQOUC251 Corporation as a whole?
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