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Thalassines Kataskeves, S.A., of Greece makes marine equlpment. The company has been experlencing losses on its bilge pump product line for several years. The most
Thalassines Kataskeves, S.A., of Greece makes marine equlpment. The company has been experlencing losses on its bilge pump product line for several years. The most recent quarterly contribution format Income statement for the blge pump product line follows: Thalassines Kataskeves, S.A Income Statement-Bilge Pump For the Quarter Ended March 31 Sales 41e,8e8 Variable expenses Variable manufacturing expenses Sales commissions Shipping 127,888 51,9ee 25,888 Total variable expenses Contribution margin Fixed expenses: 283,888 287,8e0 Advertising (for the bilge pump product line) 23,800 Depreciation of equipment (no resale value) General factory overhead 49,888 118,808 18,800 48,e Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses 345,9e8 $ (138,8e8) Net operating loss Common costs allocated on the basis of machlne-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 billge pump product line
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