Exercise 9-3 Deciding Whether to Drop or Retain a Segment (LO1 - CC3) 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: THALASSINES KATASKEVES, S.A. Income Statement-Bilge Pump Sales For the Quarter Ended March 31 Variable manufacturing expenses Less: Variable expenses: Sales commissions Shipping Total variable expenses Contribution margin Less: Fixed expenses: Advertising Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department expenses Total fixed expenses Net operating loss Common costs allocated on the basis of machine-hours. *Common costs allocated on the basis of sales dollars. 950,000 340,000 46,000 14,000 400,000 550,000 290,000 90,000 115,000* 38,000 18,000 65,000+ 616,000 (66,000) 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: Compute the net advantage or disadvantage if the bilge pump product line be discontinued? (Negative amount should be indicated by a minus sign.) Net advantage (disadvantage) of dropping the line Should the bilge pump product line be discontinued? Yes