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Exercise 11-15 (Algo) Dropping or Retaining a Segment (LO11-2] Thalassines Kataskeves, S A, of Greece makes marine equipment. The company has been experiencing losses on
Exercise 11-15 (Algo) Dropping or Retaining a Segment (LO11-2] 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 product line follows: Thalassine Katankavos, SIA Income statement-tige Trump for the Quarter Ended March 31 Sales $490,000 Variable expo Variable manufacturing expenses $ 133,000 Sales commissione 40.000 Shipping 14.000 Total variable expDGS 195.000 Contribution margin 295,000 Fixed expenses Advertising for the bilge pump product line) 21,000 Depreciation of equipment (no reale value) 107.000 Ceneral factory overhead salary of product line manager ,000 Tourance on inventories 10.000 Purebacing department Total fixed expenses 342.000 Het operating los 10000) Common costs allocated on the basis of machine hours. Common costs allocated on the basis of sales dollars. Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company's total general factory overhead of total Purchasing Department expenses Required: What is the financial advantage disadvantage of discontinuing the bige pump product line? 47,000 42.000
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