Brickman's Pharmacy Sells a Variety of Products ​
the Fixed Costs Consist of Insurance, Property Taxes, Interest

Essay

Brickman's Pharmacy sells a variety of products.The business is divided into four segments or departments for reporting purposes.The departments and their operating results are shown below: $\begin{array}{lrrrrr}&\text { Pharmaceuticals}&\text { Cosmetics }&\text { Grocery } &\text { Household }\\\text { Sales Revenue } & \$ 600,000 & \$ 300,000 & \$ 200,000 & \$ 400,000 \\\text { Variable Costs } & 425,000 & 200,000 & 170,000 & 250,000\\\text { Contribution Margin } & \$ 175,000 & \$ 100,000 & \$ 30,000 & \$ 150,000 \\\text { Fixed Costs } & 80,000 & 60,000 & 40,000 & 80,000 \\\text { Net Income (Loss) } & \$ \mathbf{9 5 , 0 0 0} & \mathbf{\$ 4 0 , 0 0 0} & \mathbf{\$ ( 1 0 , 0 0 0 )} & \mathbf{\$} 70,000\end{array}$ ​
The fixed costs consist of insurance, property taxes, interest, and other costs that will not be eliminated if a department is discontinued.
Brickman's management is considering eliminating the grocery department.Assuming sales in the other departments will not be affected by dropping the grocery department, what will be the effect on the company's total operating income?