EXERCISE 6-15 Dropping or Retaining a Segment L06-2 encing losses on its bilge pump product line for several years. The most recent quarterly contribu- Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experi- tion format income statement for the bilge pump product line follows: Sales.. Variable expenses: Variable manufacturing expenses. Sales commissions. Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Company Shipping... bundait 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. + Common costs allocated on the basis of sales dollars. $330,000 42,000 18,000 270,000 80,000 105,000* 32,000 8,000 45,000* leder $850,000 bor ef 390,000 460,000 SA 540,0002 $ (80,000) 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 Depart- ment expenses. wollot Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line? nobenod
EXERCISE 6-15 Dropping or Retaining a Segment L06-2 encing losses on its bilge pump product line for several years. The most recent quarterly contribu- Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experi- tion format income statement for the bilge pump product line follows: Sales.. Variable expenses: Variable manufacturing expenses. Sales commissions. Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Company Shipping... bundait 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. + Common costs allocated on the basis of sales dollars. $330,000 42,000 18,000 270,000 80,000 105,000* 32,000 8,000 45,000* leder $850,000 bor ef 390,000 460,000 SA 540,0002 $ (80,000) 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 Depart- ment expenses. wollot Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line? nobenod
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:EXERCISE 6-15 Dropping or Retaining a Segment L06-2
encing losses on its bilge pump product line for several years. The most recent quarterly contribu-
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experi-
tion format income statement for the bilge pump product line follows:
Sales.
Variable expenses:
Thalassines Kataskeves, S.A.
Income Statement-Bilge Pump
For the Quarter Ended March 31
Variable manufacturing expenses.
aindly Sales commissions.
Shipping.....
buldott 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
91 Insurance on inventories..
21Purchasing department.
1d Total fixed expenses
Net operating loss
*Common costs allocated on the basis of machine-hours.
+ Common costs allocated on the basis of sales dollars.
$330,000
42,000
18,000
270,000
80,000
105,000*
32,000
8,000
45,000+
$850,000
390,000
460,000
540,000
$ (80,000)
77)
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 Depart-
1800 gnistsqo gniwollol
ment expenses.
Required:
What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?
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