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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: $400,000 Variable manufacturing expenses Sales commissions Shipping $ 138,000 42,000 23,000 Total variable expenses Contribution margin Fixed expenses: 203,000 197,000 Advertising (for the bilge pump product line) 22,000 Depreciation of equipment (no resale value) 103,000 36,000* 7,000 60,000t General factory overhead Salary of product-line manager Insurance on inventories 129,000 Purchasing department Total fixed expenses 357,000 $ (160,000) 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 Requirec What is the financial advantage (disadvantage) of discontinuing the bilge pump product line? inancial (disadvantage)
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