Exercise 13-15 (Algo) Dropping or Retaining a Segment [LO13-2]Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pumpproduct line for several years. The most recent quarterly contribution format income statement for the bilge pump follows:Thalassines Kataskeves, S.A.Income Statement-Bilge PumpFor the Quarter Ended March 31SalesVariable expenses:Variable manufacturing expensesSales commissionsShippingTotal variable expensesContribution marginFixed expenses:Advertising (for the bilge pump product line)Depreciation of equipment (no resale value)General factory overheadSalary of product-line managerInsurance on inventoriesPurchasing departmentTotal fixed expensesNet operating loss.*Common costs allocated on the basis of machine-hours.+Common costs allocated on the basis of sales dollars.$ 121,00050,00010,00029,000118,00038,000*118,0006,00048,000*$ 460,000Required:What is the financial advantage (disadvantage) of discontinuing the bilge pump?181,000279,000357,000$ (78,000)Discontinuing the bilge pump would not affect sales of other product lines and would have no effect on the company's total generalfactory overhead or total Purchasing Department expenses.

The financial advantages and disadvantages of discontinuing a product line should be carefully…

Answered: Thalassines Kataskeves, S.A., of Greece…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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