10tsThalassines 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:SalesVariable expenses:Variable manufacturing expensesSales commissionsShippingTotal variable expensesContribution marginFixed expenses:Advertising (for the bilge pump product line)Depreciation of equipment (no resale value)Thalassines Kataskeves, S.A.Income Statement-Bilge PumpFor the Quarter Ended March 316General factory overheadSalary of product-line managerInsurance on inventoriesPurchasing departmentTotal fixed expensesNet operating loss*Common costs allocated on the basis of machine-hours.tCommon costs allocated on the basis of sales dollars.$ 139,00055,00022,00029,000107,000Answer is not complete.$ 95,000 X43,000*126,00013,00047,000+Required:What is the financial advantage (disadvantage) of discontinuing the bilge pump?$ 460,000216,000244,000Discontinuing 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.365,000$ (121,000)

While deciding whether or not to continue with a product line, all relevant cost must be taken into…

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) General factory overhead

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) General factory overhead

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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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

10
ts
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
Fixed expenses:
Advertising (for the bilge pump product line)
Depreciation of equipment (no resale value)
Thalassines Kataskeves, S.A.
Income Statement-Bilge Pump
For the Quarter Ended March 31
6
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.
tCommon costs allocated on the basis of sales dollars.
$ 139,000
55,000
22,000
29,000
107,000
Answer is not complete.
$ 95,000 X
43,000*
126,000
13,000
47,000+
Required:
What is the financial advantage (disadvantage) of discontinuing the bilge pump?
$ 460,000
216,000
244,000
Discontinuing the bilge pump 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.
365,000
$ (121,000)

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