Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its...
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Thalassines Kataskeves, S.A., 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 product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses $127,000 Sales commissions Shipping 47,000 22,000 Total variable expenses $460,000 196,000 Contribution margin 264,000 Fixed expenses: Advertising 27,000 Depreciation of equipment (no resale 111,000 value) General factory overhead 32,000* Salary of product-line manager 126,000 Insurance on inventories 8,000 46,000+ Purchasing department Total fixed expenses Net operating loss 350,000 $ (86,000) Required a. Compute the amount of Contribution Margin lost if the bilge pump product line is discontinued. (Enter the lost Contribution Margin as a negative amount.) Contribution Margin Lost b. Compute the amount of Fixed Expenses saved if the bilge pump product line is discontinued. (Enter the fixed expenses saved as a positive amount.) Fixed Expenses Saved Based on your answer from a and b above, compute the increase or decrease of net c. operating income if the bilge pump product line is discontinued. (Decreases should be indicated as a negative amount.) Change in Net Operating Income if Product Line is Dropped _ Thalassines Kataskeves, S.A., 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 product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses $127,000 Sales commissions Shipping 47,000 22,000 Total variable expenses $460,000 196,000 Contribution margin 264,000 Fixed expenses: Advertising 27,000 Depreciation of equipment (no resale 111,000 value) General factory overhead 32,000* Salary of product-line manager 126,000 Insurance on inventories 8,000 46,000+ Purchasing department Total fixed expenses Net operating loss 350,000 $ (86,000) Required a. Compute the amount of Contribution Margin lost if the bilge pump product line is discontinued. (Enter the lost Contribution Margin as a negative amount.) Contribution Margin Lost b. Compute the amount of Fixed Expenses saved if the bilge pump product line is discontinued. (Enter the fixed expenses saved as a positive amount.) Fixed Expenses Saved Based on your answer from a and b above, compute the increase or decrease of net c. operating income if the bilge pump product line is discontinued. (Decreases should be indicated as a negative amount.) Change in Net Operating Income if Product Line is Dropped _
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Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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