Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales $430,000 Variable expenses: \begin{tabular}{lr} Variable manufacturing expenses & $122,000 \\ Sales commissions & 42,000 \\ Shipping & 13,000 \\ \hline \end{tabular} Total variable expenses 177,000 Contribution margin Fixed expenses: Advertising 22,000 Depreciation of equipment (no resale 114,000 value) General factory overhead 46,000 Salary of product-line manager 113,000 \begin{tabular}{ll} Insurance on inventories & 15,000 \\ Purchasing department & 53,000 \\ \cline { 2 - 2 } & \end{tabular} Total fixed expenses 363,000 *Common costs allocated on the basis of machine-hours. TCommon 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 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.) Based on your answer from a and b above, compute the increase or decrease of net c. 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? Yes No