Thalassines Kataskeves, SA of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump follows:

Thalassines Kataskeves, SA

Income StatementBilge Pump

For the Quarter Ended March

Sales $

Variable expenses:

Variable manufacturing expenses $

Sales commissions

Shipping

Total variable expenses

Contribution margin

Fixed expenses:

Advertising for the bilge pump product line

Depreciation of equipment no resale value

General factory overhead

Salary of productline manager

Insurance on inventories

Purchasing department

Total fixed expenses

Net operating loss $

Common costs allocated on the basis of machinehours.

Common costs allocated on the basis of sales dollars.

Discontinuing the bilge pump would not affect sales of other product lines and would have no effect on the companys total general factory overhead or total Purchasing Department expenses.

Required:

What is the financial advantage disadvantage of discontinuing the bilge pump?

Answer rating: 100% (QA)

Analyzing the Financial Impact of Discontinuing the Bilge Pump To determine the financial advantage or disadvantage of discontinuing the bilge pump pr... View the full answer