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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 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: 440,000 Variable manufacturing expenses Sales commissions s 139,000 54,000 11,000 Shipping 204,000 236,000 Total variable expenses Contribution margin Fixed expenses: 25,000 117,000 49,000 120,000 9,000 51,000 t 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 Total fixed expenses 371,000 $ (135,000) Net operating loss Common costs allocated on the basis of machine-hours fCommon 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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