Answered step by step
Verified Expert Solution
Question
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 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 StatementBilge Pump For the Quarter Ended March 31 Sales $ 460,000 Variable expenses: Variable manufacturing expenses $ 136,000 Sales commissions 40,000 Shipping 17, 000 Total variable expenses 193,000 Contribution margin 267 , 000 Fixed expenses: Advertising (for the bilge pump product line) 24,000 Depreciation of equipment (no resale value) 113,000 General factory overhead 41,000* Salary of productline manager 126,000 Insurance on inventories 14,000 Purchasing department 44,0001 Total fixed expenses 362,000 Net operating loss $ (95,000) l *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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started