Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

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

image text in transcribed

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: $410,000 Variable manufacturing expenses $ 135,000 Sales commissions Shipping 43,000 23,000 Total variable expenses 201, 000 Contribution margin 209, 000 Fixed expenses: Advertising (for the bilge pump product line) 21,000 104,000 35,000* Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. +Common costs allocated on the basis of sales dollars. 113,000 8,000 59,000+ 340, 000 $ (131,000) 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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial and Managerial Accounting

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

2nd edition

978-1118334263

Students also viewed these Accounting questions

Question

What is the relationship between the Internet and databases?

Answered: 1 week ago

Question

=+b) Is this an example of the Law of Large Numbers? Explain.

Answered: 1 week ago