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 income statement for the bilge pump product line follows:

The currency in Greece is the euro, denoted by ?. The discontinuance of the bilge pump product line would not affect sales of other product lines and would have no noticeable effect on the company?s total general factory overhead or total purchasing department expenses.

Required:

Would you recommend that the bilge pump product line be discontinued? Support your answer with appropriate computations.

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THALASSINES KATASKEVES, S.A. Income Statement–Bilge Pump For the Quarter Ended March 31 €950,000 Sales Less: Variable expenses: Variable manufacturing ex penses €340,000 Sales commissions 46,000 Shipping 14.000 Total variable expenses 400,000 Contribution margin 550,000 Less: Fixed expenses: Advertising 290,000 90,000 Depreciation of equipment (no resale value) General factory overhead 115,000* Salary of product-line manager 38,000 Insurance on inventories 18,000 65,000* Purchasing department ex penses Total fixed expenses 616,000 Net operating loss €(66,000)