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:

*Common costs allocated on the basis of machine-hours.

Common 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 companys total general factory overhead or total Purchasing Department expenses.

Required:

What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?

Thalassines Kataskeves, S.A Income Statement-Bilge Pump For the Quarter Ended March 3:1 Sales Variable expenses: $ 410,000 Variable manufacturing expenses Sales commissions Shipping $ 135,000 43,000 22,000 Total variable expenses Contribution margin Fixed expenses: 200,000 210,000 Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department 22,000 112,000 40,000 110,000 14,00e 59,000t Total fixed expenses Net operating loss 357,000 $ (147,000)