Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What is the financial advantage (disadvantage) of discontinuing the bulge pump product line? Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been

What is the financial advantage (disadvantage) of discontinuing the bulge pump product line? image text in transcribed
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 Sales Variable expenses: 460,00 Variable manufacturing expenses Sales commissions Shipping 131,000 48,000 14,000 Total variable expenses Contribution margin Fixed expenses: 193,000 267,000 25,000 102,000 Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) General factory overheacd Salary of product-line manager Insurance on inventories 49,000 119,000 11,000 50,000 Purchasing departnent Total fixed expenses Net operating loss 356,000 $ (89,000) Common costs allocated on the basis of machine-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 bilge pump product line

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions