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this is one question Thalassines kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for
this is one question
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 follo Thalassines kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales $ 460,000 Variable expenses: Variable manufacturing expenses $ 125,000 Sales commissions 50,000 Shipping 15,000 Total variable expenses 190,000 Contribution margin 270,000 Fixed expenses Advertising (for the bilge pump product line) 24,000 Depreciation of equipment (no resale value) 103,000 General factory overhead 36,000 Salary of product-line manager 110,000 Insurance on Inventories 6,000 Purchasing department 47,000 Total fixed expenses 326,000 Not operating lons $ (56,000) "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 aantage (disadvantage) of discontinuing the bilge pump product line Step by Step Solution
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