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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 product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses $ 450,000 $ 127,000 Sales commissions 48,000 18,000 Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) 193,000 257,000 26,000 117,000 37,000* General factory overhead Salary of product-line manager 117,000 7,000 Insurance on inventories Purchasing department 54,000t Total fixed expenses 358,000 Net operating loss $(101,000) *Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. 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 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 product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses $ 450,000 $ 127,000 Sales commissions 48,000 18,000 Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) 193,000 257,000 26,000 117,000 37,000* General factory overhead Salary of product-line manager 117,000 7,000 Insurance on inventories Purchasing department 54,000t Total fixed expenses 358,000 Net operating loss $(101,000) *Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. 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 Department expenses.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses $ 450,000 $ 127,000 48,000 18,000 Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) 193,000 257,000 26,000 117,000 General factory overhead Salary of product-line manager 37,000* 117,000 7,000 Insurance on inventories Purchasing department 54,000t Total fixed expenses 358,000 Net operating loss $(101,000) *Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. 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 Department expenses.
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 contribution format income statement for the bilge pump product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses $ 450,000 $ 127,000 48,000 18,000 Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) 193,000 257,000 26,000 117,000 General factory overhead Salary of product-line manager 37,000* 117,000 7,000 Insurance on inventories Purchasing department 54,000t Total fixed expenses 358,000 Net operating loss $(101,000) *Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. 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 Department expenses.
257,000 Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) 26,000 117,000 37,000* General factory overhead Salary of product-line manager 117,000 7,000 Insurance on inventories Purchasing department 54,000t Total fixed expenses 358,000 Net operating loss $(101,000) *Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. 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 Department expenses. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line? Financial (disadvantage) 24 149,743
Transcribed Image Text:257,000 Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) 26,000 117,000 37,000* General factory overhead Salary of product-line manager 117,000 7,000 Insurance on inventories Purchasing department 54,000t Total fixed expenses 358,000 Net operating loss $(101,000) *Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. 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 Department expenses. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line? Financial (disadvantage) 24 149,743
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