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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 Sales Variable expenses: $ 420,e00 Variable manufacturing expenses Sales commissions Shipping $ 129,000 52,000 23,000 Total variable expenses Contribution margin Fixed expenses: 204,000 216,000 21,000 104,000 49,000 117,000 14,000 47,000 Advertising (for the bilge pump product 1ine) Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses 352,000 (136,000) 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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