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, SA. ncome Statement-Blige Pump For the Quarter Ended March 31 $ 470,000 Sales Variable expenses Variable manufacturing expenses Sales commissions Shipping $139,000 53,000 9,000 Total variable expenses 211,000 259,000 Contribution margin Fixed expenses Advertising Depreciation of equipment (no resale value) General factory overhead Salary of product-ine manager Insurance on inventories Purchasing department 24,000 116,000 38,000 124,000 15,000 43,000t Total fixed expenses 360,000 Net operating loss s(101,000) Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars Discontnuing 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 Income Statement-Bilge Pump For the Quarter Ended March 31 Difference: Product Line Product Line Increase or (Decrease) Keep Drop Net Operating Variable 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 Income Statement-Bilge Pump For the Quarter Ended March 31 Difference: Net Operating Drop Product Line Product LineIncome Keep Increase or Variable expenses Totai variabie expenses Fixed expenses Total txed expenses b. Would you recommend that the bilge pump product line be disconsnued? O Yes Reterences eBook& Resources Type here to search