Question
Les Objets Volante (LOJ), S.A., of France, makes aircraft equipment. The company has been experiencing losses on its fuel pump product line for several years.
Les Objets Volante (LOJ), S.A., of France, makes aircraft equipment. The company has been experiencing losses on its fuel pump product line for several years. The most recent quarterly income statement for the fuel pump product line follows: LES OBJETS VOLANTS S.A. Income StatementFuel Pump For the Quarter Ended March 31 Sales 1,000,000 Less: Variable expenses: Variable manufacturing expenses 320,000 Sales commissions 66,000 Shipping 14,000 Total variable expenses 400,000 Contribution margin 600,000 Less: Fixed expenses: Advertising 290,000 Depreciation
Les Objets Volants (LOJ), S.A., of France, makes aircraft equipment. The company has been experiencing losses on its fuel pump product line for several years. The most recent quarterly income statement for the fuel pump product line follows: *Common costs allocated on the basis of machine-hours. The currency in France is the euro, denoted by . Discontinuing the fuel pump product line would not affect sales of other product lines and would have no noticeable effect on the company's total general factory overhead or total purchasing department expenses. Required: Compute the net advantage or disadvantage if the fuel pump product line be discontinued? (Negative amount should be indicated by a minus sign.) Should the fuel pump product line be discontinuedStep by Step Solution
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