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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: $ 430,000 Variable manufacturing expenses Sales commissions Shipping 128,000 41,000 20,000 Total variable expenses Contribution margin Fixed expenses: 189,000 241,000 Advertising (for the bilge pump product line) 24,000 110,000 36,000 119,000 13,000 58,000t Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses 360,000 (119,000) Net operating loss Common costs allocated on the basis of machine-hours. fCommon 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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