ances Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on...
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ances 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. Incone Statenent-Bilge Pump For the Quarter Ended March 31 Sales $ 460,000 Variable expensest Variable manufacturing expenses Sales commissions $135,000 53,000 Shipping 21,000 Total variable expenses. 209,000 251,000 Contribution margin Fixed expenses 23,000 Advertising (for the bilge pump product line): Depreciation of equipment (no resale value) 120,000 General factory overhead 34,000 Salary of product-line manager 127,000 Insurance on inventories 8,000 47,0001 Purchasing department Total fixed expenses et operating loss 359,000 $(100,000) *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? ances 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. Incone Statenent-Bilge Pump For the Quarter Ended March 31 Sales $ 460,000 Variable expensest Variable manufacturing expenses Sales commissions $135,000 53,000 Shipping 21,000 Total variable expenses. 209,000 251,000 Contribution margin Fixed expenses 23,000 Advertising (for the bilge pump product line): Depreciation of equipment (no resale value) 120,000 General factory overhead 34,000 Salary of product-line manager 127,000 Insurance on inventories 8,000 47,0001 Purchasing department Total fixed expenses et operating loss 359,000 $(100,000) *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?
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Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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