EXERCISE 11-15 Dropping or Retaining a Segment L011-20 keves, 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, SA. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: $850,000 Variable manufacturing expenses Sales commissions Shipping $330,000 42.000 18,000 Total variable expenses Contribution margin Fixed expenses 390,000 460,000 Advertising for the bilge pump product line) Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department 270,000 80,000 105,000 32000 8,000 45,000 Total fixed expenses Net operating loss 540,000 $ (80,000) Common costs altocated on the basis of machine-hours Common costs allocated on the basis of sales dollars