Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on...
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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 $ 420,000 Sales Variable expenses: $ 130,000 49,000 17,000 Variable manufacturing expenses ales commissions Shipping Total variable expenses Contribution margin Fixed expenses: 196,000 224,000 Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) 25,000 107,000 General factory overhead Salary of product-line manager Insurance on inventories 30,000* 117,000 12,000 52,000t Purchasing department 343,000 $ (119,000) Total fixed expenses Net operating loss 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
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