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Thalassines kataskeves, SA, of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most
Thalassines kataskeves, SA, 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-ilge Pump For the Quarter Ended March 31 Sales $430,000 Variable expenses ! Variable manufacturing expenses $ 136,000 Sales commissions 54,000 Shipping 24,000 Total variable expenses 214,00 Contribution margin 216,000 Fixed expenses Advertising (for the bilge pump product line) 27,600 Depreciation of equipment (no resale value) 111,000 General factory overhead 37,000 Salary of product line manager 128,000 Insurance on inventories 10,000 Purchasing department 59,000+ Total fixed expenses 372,800 Net operating loss 5 (156,000) "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 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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