THALASSINES KATASKEVES, SA Income Statement-Bilge Pump For the Quarter Ended March 31 Sales €950,000 Less: Variable expenses: Variable manufacturing expenses €340,000 Sales commissions 46,000 Shipping 14,000 Total variable expenses 400,000 Contribution margin 550,000 Less: Fixed expenses: Advertising 290,000 Depreciation of equipment (no resale value) 90,000 General factory overhead 115,000* Salary of product-line manager 38,000 Insurance on inventories 18,000 Purchasing department expenses 65.000' Total fixed expenses 616.000 Net operating loss E166.000) "Common costs allocated on the basis of machine-hours "Common costs allocated on the basis of sales dollars The currency in Greece is the euro, denoted by €. The discontinuance of the bilge pump product line would not affect sales of other produ lines and would have no noticeable effect on the company's total general factory overhead or total purchasing department expenses.
THALASSINES KATASKEVES, SA Income Statement-Bilge Pump For the Quarter Ended March 31 Sales €950,000 Less: Variable expenses: Variable manufacturing expenses €340,000 Sales commissions 46,000 Shipping 14,000 Total variable expenses 400,000 Contribution margin 550,000 Less: Fixed expenses: Advertising 290,000 Depreciation of equipment (no resale value) 90,000 General factory overhead 115,000* Salary of product-line manager 38,000 Insurance on inventories 18,000 Purchasing department expenses 65.000' Total fixed expenses 616.000 Net operating loss E166.000) "Common costs allocated on the basis of machine-hours "Common costs allocated on the basis of sales dollars The currency in Greece is the euro, denoted by €. The discontinuance of the bilge pump product line would not affect sales of other produ lines and would have no noticeable effect on the company's total general factory overhead or total purchasing department expenses.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![EXERCI
Deciding Whether to Drop or Retain a Segment [LO1– CC3]
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:
THALASSINES KATASKEVES, S.A.
Income Statement-Bilge Pump
For the Quarter Ended March 31
Sales
€950,000
Less: Variable expenses:
Variable manufacturing expenses
€340,000
Sales commissions
46,000
Shipping
14,000
Total variable expenses
400,000
Contribution margin
550,000
Less: Fixed expenses:
Advertising
290,000
Depreciation of equipment (no resale value)
90,000
General factory overhead
115,000*
Salary of product-line manager
38,000
Insurance on inventories
18,000
Purchasing department expenses
65,000'
Total fixed expenses
616,000
Net operating loss
€(66.000)
"Common costs allocated on the basis of machine-hours
"Common costs allocated on the basis of sales dollars
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.
Required:
Would you recommend that the bilge pump product line be discontinued? Support your answer with appropriate computations.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F55259130-739f-46f4-a99f-fa8e5278c402%2F048eef74-f32f-4b2a-8638-69732d871271%2F73eda41a_processed.jpeg&w=3840&q=75)
Transcribed Image Text:EXERCI
Deciding Whether to Drop or Retain a Segment [LO1– CC3]
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:
THALASSINES KATASKEVES, S.A.
Income Statement-Bilge Pump
For the Quarter Ended March 31
Sales
€950,000
Less: Variable expenses:
Variable manufacturing expenses
€340,000
Sales commissions
46,000
Shipping
14,000
Total variable expenses
400,000
Contribution margin
550,000
Less: Fixed expenses:
Advertising
290,000
Depreciation of equipment (no resale value)
90,000
General factory overhead
115,000*
Salary of product-line manager
38,000
Insurance on inventories
18,000
Purchasing department expenses
65,000'
Total fixed expenses
616,000
Net operating loss
€(66.000)
"Common costs allocated on the basis of machine-hours
"Common costs allocated on the basis of sales dollars
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.
Required:
Would you recommend that the bilge pump product line be discontinued? Support your answer with appropriate computations.
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