$4$

Exercise $9-3$ Deciding Whether to Drop or Retain a Segment $($LO$1-$ CC$3)$

Les Objets Volants $($LOJ$),$ S$.$A$.,$ of France, makes aircraft equipment. The company has been experiencing losses on its fuel pump product line for several years. The most recent quarterly income statement for the fuel pump product line follows:

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"Common costs allocated on the basis of machine$-$hours.

${?}^{}$ Common costs allocated on the basis of sales dollars.

The currency in France is the euro, denoted by $.$ Discontinuing the fuel 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.

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Required:

Compute the net advantage or disadvantage if the fuel pump product line be discontinued? $($Negative amount should be indicated by a minus sign.$)$

Net advantage $($disadvantage$)$ of dropping the line

Should the fuel pump product line be discontinued?

Yes

No