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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
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, SAIncome StatementBilge PumpFor 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?
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