Thalassines Kataskevs, S.A., of Greece makes marine equipment. The company has been experiencing Mosses on its...

Transcribed Image Text:

Thalassines Kataskevs, S.A., of Greece makes marine equipment. The company has been experiencing Mosses 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 Sales Variable expenses: Sales commissions Variable manufacturing expenses Shipping Total variable expenses Contribution margin 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. tCommon costs allocated on the basis of sales dollars. 470,000 133,000 48,000 25,000 206,000 264,000 24,000 105,000 31,000 111,000 7,000 52,000t 330,000+ $ (66,000) 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 Kataskevs, S.A., of Greece makes marine equipment. The company has been experiencing Mosses 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 Sales Variable expenses: Sales commissions Variable manufacturing expenses Shipping Total variable expenses Contribution margin 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. tCommon costs allocated on the basis of sales dollars. 470,000 133,000 48,000 25,000 206,000 264,000 24,000 105,000 31,000 111,000 7,000 52,000t 330,000+ $ (66,000) 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?