Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its...
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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: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Fixed expenses: 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 Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. +Common costs allocated on the basis of sales dollars. $ 129,000 48,000 14,000 26,000 103,000 39,000 122,000 10,000 46,000 $ 440,000 191,000 249,000 346,000 $ (97,000) 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. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line? 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: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Fixed expenses: 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 Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. +Common costs allocated on the basis of sales dollars. $ 129,000 48,000 14,000 26,000 103,000 39,000 122,000 10,000 46,000 $ 440,000 191,000 249,000 346,000 $ (97,000) 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. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?
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Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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