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 € 340,000 46,000 14,000 € 950,000 400,000
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 € 340,000 46,000 14,000 € 950,000 400,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Vai
Transcribed Image Text: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:
Variable manufacturing expenses
Sales commissions
Shipping
Total variable expenses
Contribution margin
Less: Fixed expenses:
THALASSINES KATASKEVES, S.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.
Net advantage (disadvantage) of dropping the line
€ 340,000
46,000
14,000
Should the bilge pump product line be discontinued?
O Yes
O No
290,000
90,000
115,000*
38,000
18,000
65,000+
€ 950,000
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.
400,000
550,000
Required:
Compute the net advantage or disadvantage if the bilge pump product line be discontinued? (Negative amount should
be indicated by a minus sign.)
616,000
€ (66,000)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education