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: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) Thalassines kataskeves, S.A. Income Statement-Dilge Pusp For the Quarter Ended March 31 General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss *Common (indirect) costs allocated on the basis of machine-hours. +Common (indirect) costs allocated on the basis of sales dollars. $ 126,000 49,000 21,000 Show Transcribed Text 27,000 119,000 35,000 111,000 10,000 42,000 $ 440,000 3 196,000 244,000 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. 344,000 $(100,000) Required: What is the total financial Impact of discontinuing the bilge pump product line? (Indicate a negative impact with a negative sign.) (Hint: See Example 11-2a in the course packet for guidance.)
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: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) Thalassines kataskeves, S.A. Income Statement-Dilge Pusp For the Quarter Ended March 31 General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss *Common (indirect) costs allocated on the basis of machine-hours. +Common (indirect) costs allocated on the basis of sales dollars. $ 126,000 49,000 21,000 Show Transcribed Text 27,000 119,000 35,000 111,000 10,000 42,000 $ 440,000 3 196,000 244,000 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. 344,000 $(100,000) Required: What is the total financial Impact of discontinuing the bilge pump product line? (Indicate a negative impact with a negative sign.) (Hint: See Example 11-2a in the course packet for guidance.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Sales commissions
Shipping
Total variable expenses
Contribution margin.
Fixed expenses:
Advertising (for the bilge punp 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 (indirect) costs allocated on the basis of machine-hours.
+Common (indirect) costs allocated on the basis of sales dollars.
C
Show Transcribed Text
$ 126,000
49,000
21,000
Show Transcribed Text
27,000
119,000
35,000*
111,000.
10,000
47,000
$ 440,000
196.000
244,000
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.
344,000
$(100,000)
Required:
What is the total financial Impact of discontinuing the bilge pump product line? (Indicate a negative impact with a negative sign.) (Hint:
See Example 11-2a in the course packet for guidance.)
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