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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 Income statement for the bilge pump product line follows: THALASSINES KATASKEVES, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales E 950, 090 Less: Variable expenses: Variable manufacturing expenses E 340, 090 Sales commissions 46, 908 Shipping 14, 908 Total variable expenses 408, 908 Contribution margin 550, 090 Less: Fixed expenses: Advertising 290, 908 Depreciation of equipment (no resale value) ge, Bee General factory overhead 115, 080 Salary of product - line manager 38, 090 Insurance on inventories 18, Bee Purchasing department expenses 65, Beet Total fixed expenses 616,908 Net operating loss E (66,090) Common costs allocated on the basis of machine-hours. Common costs allocated on the basis of sales dollars. The currency In Greece is the euro, denoted by E. The discontinuance of the bilge pump product line would not affect sales of other product lines and would have no noticeable effect on the company's total general factory overhead or total purchasing department expenses. Required: Compute the net advantage or disadvantage if the bilge pump product line be discontinued? (Negative amount should be Indicated by a minus sign.) Net advantage (disadvantage) of dropping the line Should the bilge pump product line be discontinued? Yes O No
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