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: Sales Less: Variable expenses: THALASSINES KATASKEVES, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Variable manufacturing 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. € 340,000 46,000 14,000 290,000 90,000 115,000 38,000 18,000 65,0001 €950,000 400,000 550,000 616,000 € (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
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: Sales Less: Variable expenses: THALASSINES KATASKEVES, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Variable manufacturing 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. € 340,000 46,000 14,000 290,000 90,000 115,000 38,000 18,000 65,0001 €950,000 400,000 550,000 616,000 € (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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Am. 310.
Transcribed Image Text:Thalassines Kataskeves, SA, 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:
Sales
Less: Variable expenses:
Variable manufacturing expenses
Sales commissions
Shipping
Total variable expenses
Contribution margin
Less: Fixed expenses:
THALASSINES KATASKEVES, 5.A.
Income Statement-Bilge Pump
For the Quarter Ended March 31
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.
Required:
Compute the net advantage or disadvantage if the bilge pump
by a minus sign.)
Net advantage (disadvantage) of dropping the line
Yes
€ 340,000
46,000
14,000
V
O No
290,000
90,000
115,000-
38,000
18,000
65,0001
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.
Should the bilge pump product line be discontinued?
€950,000
400,000
550,000
616,000
€ (66,000)
line be discontinued?
amount should be indicated
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