Exercise 10-15 Dropping or Retaining a Segment [LO10-2] 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 For the Quarter Ended March 31 410,000 Sales Variable expenses: $125,000 Variable manufacturing expenses 47,000 Sales commissions 17,000 Shipping Total variable expenses 189,000 221,000 Contribution margin Fixed expenses: 24,000 Advertising Depreciation of equipment (no resale value) 109,000 General factory overhead 44,000 128,000 Salary of product-line manager 6,000 Insurance on inventories 42,000t Purchasing department Total fixed expenses 353,000 $(132,000) Net operating loss *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