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 product line follows:

Thalassines Kataskeves, SA

Income StatementBilge Pump

For the Quarter Ended March

Sales $

Variable expenses:

Variable manufacturing expenses $

Sales commissions

Shipping

Total variable expenses

Contribution margin

Fixed expenses:

Advertising

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 product line 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

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.

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.

c Based on your answer from a and b above, compute the increase or decrease of net operating income if the bilge pump product line is discontinued. Decreases should be indicated as a negative amount.

d Would you recommend that the bilge pump product line be discontinued?