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 contribution format income statement for the bilge pump follows: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 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. $ 140,000 49,000 17,000 25,000 117,000 32,000 119,000 10,000 41,000 $ 410,000 Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump? Financial (disadvantage) 206,000 204,000 344,000 $ (140,000) Discontinuing the bilge pump would not affect sales of other product lines and would have no effect on the company's total genera factory overhead or total Purchasing Department expenses.

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 contribution format income statement for the bilge pump follows: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 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. $ 140,000 49,000 17,000 25,000 117,000 32,000 119,000 10,000 41,000 $ 410,000 Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump? Financial (disadvantage) 206,000 204,000 344,000 $ (140,000) Discontinuing the bilge pump would not affect sales of other product lines and would have no effect on the company's total genera factory overhead or total Purchasing Department expenses.

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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