$13-15.$

Exercise $13-15($Algo$)$ Dropping or Retaining a Segment $[$LO$13-2]$

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 follows:

Thalassines Kataskeves, S$.$A$.$

Income Statement$-$Bilge Pump

For the Quarter Ended March $31$

Sales

Variable expenses:

$\backslash$table$[[$Variable manufacturing expenses,$$137,000,],[$Sales commissions,$49,000,],[$Shipping$,20,000,],[$otal variable expenses,,$206,000],[$ontribution margin,,$274,000]]$

Contribution ma Fixed expenses:

Advertising $($for the bilge pump product line$)26,000$

Depreciation of equipment $($no resale value$)109,000$

General factory overhead $40,00{}^{**}$

Salary of product$-$line manager $127,000$

Insurance $on$ inventories $10,000$

Purchasing department $,49,{000}^{}$

$\backslash$table$[[$Total fixed expenses,$361,000],[$Net operating loss,$$(87,000{)}_{?}$