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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 several years. The most
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 ncome statement for the bilge pump product line follows Thalassiness Kataskeves, S.A. Income Statement Bilge Pump For the Quarter Ended March 31 Sales 440,000 Variable expenses $125,000 Variable manufacturing expenses Sales commissions 51,000 10,000 Shipping 186,000 Total variable expenses 254,000 Contribution margin Fixed expenses: 24,000 Advertising Depreciation of equipment (no resale value 109,000 General factory overhead 41,000* Salary of product-line manager 122,000 Insurance on inventories 5,000 59,000t Purchasing department Total fixed expenses 360,000 $(106,000) Net operating loss *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
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