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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 income statement for the bilge pump product line follows: Thalassines Kataskeves, S.A. Income Statement Bilge Pump For the Quarter Ended March 31 410,000 Sales Variable expenses $125,000 Variable manufacturing expenses Sales commissions 47,000 Shipping 19,000 191,000 Total variable expenses 219,000 Contribution margin Fixed expenses: 25,000 Advertising Depreciation of equipment (no resale value 115,000 General factory overhead 48,000 Salary of product-line manager 123,000 11,000 nsurance on inventories 53,000t Purchasing department 375,000 Total fixed expenses $(156,000) Net operating loss Common costs allocated on the basis of machine-hours 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 company's total general factory overhead or total Purchasing Department expenses. Required a. Compute the increase or decrease of net operating income if the product line is continued or discontinued. (Decreases should be indicated by a minus sign.) Thalassines Kataskeves, S.A
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