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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 $ 470,000 Sales Variable expenses: Variable manufacturing expenses 129,000 41,000 20,000 Sales commissions Shipping Total variable expenses 190,000 280,000 Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) 21,000 100, 0 31,000 128,000 13,000 52,000t General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses 345,000 $(65,000) 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 Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line
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