Thalassines 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:Thalassines Kataskeves, S.A.Income Statement-Bilge PumpFor the Quarter Ended March 31SalesVariable expenses:$ 430,000Variable manufacturing expenses$ 137,000Sales commissions47,000Shipping18,000Total variable expenses202,000Contribution margin228,000Fixed expenses:Advertising (for the bilge pump product line)24,000103,00049,000*121,00013,00046,000+356,000$ (128,000)Depreciation of equipment (no resale value)General factory overheadSalary of product-line managerInsurance on inventoriesPurchasing departmentTotal fixed expensesNet operating loss*Common costs allocated on the basis of machine-hours.†Common costs allocated on the basis of sales dollars.Discontinuing 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.Required:What is the financial advantage (disadvantage) of discontinuing the bilge pump?

Total avoidable fixed costs = Advertising + Salary of product line manager + Insurance on…

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: 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 pump 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 costs allocated on the basis of machine-hours. +Common costs allocated on the basis of sales dollars. $ 430,000 $ 137,000 47,000 18,000 202,000 228,000 24,000 103,000 49,000* 121,000 13,000 46,000t 356,000 $ (128,000) 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. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump?

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: 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 pump 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 costs allocated on the basis of machine-hours. +Common costs allocated on the basis of sales dollars. $ 430,000 $ 137,000 47,000 18,000 202,000 228,000 24,000 103,000 49,000 121,000 13,000 46,000t 356,000 $ (128,000) 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. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 16E: Kildeer Company makes easels for artists. During the last calendar year, a total of 30,000 easels...

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Zippy Inc. manufactures a fuel additive, Surge, which has a stable selling price of 44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your examination of Zippys financial statements for the year ended September 30, management has asked you to review some computations made by Zippys cost accountant. Your working papers disclose the following about the companys operations: Standard costs per drum of product manufactured: Materials: Costs and expenses during September: Chemicals: 645,000 gallons purchased at a cost of 1,140,000; 600,000 gallons used. Empty drums: 94,000 purchased at a cost of 94,000; 80,000 drums used. Direct labor: 81,000 hours worked at a cost of 816,480. Factory overhead: 768,000. Required: Calculate the following for September, using the formulas on pages 421422 and 424 (Round unit costs to the nearest whole cent and compute the materials variances for both Surge and for the drums.): 1. Materials quantity variance. 2. Materials purchase price variance. 3. Labor efficiency variance. 4. Labor rate variance.
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Kildeer Company makes easels for artists. During the last calendar year, a total of 30,000 easels were made, and 31,000 were sold for 52 each. The actual unit cost is as follows: The selling expenses consisted of a commission of 1.30 per unit sold and advertising copayments totaling 95,000. Administrative expenses, all fixed, equaled 183,000. There were no beginning and ending work-in-process inventories. Beginning finished goods inventory was 132,600 for 3,400 easels. Required: 1. Calculate the number and the dollar value of easels in ending finished goods inventory. 2. Prepare a cost of goods sold statement. 3. Prepare an absorption-costing income statement. Add a column for percentage of sales.
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 PumpFor the Quarter Ended March 31 Sales $ 470,000 Variable expenses: Variable manufacturing expenses $ 124,000 Sales commissions 41,000 Shipping 19,000 Total variable expenses 184,000 Contribution margin 286,000 Fixed expenses: Advertising (for the bilge pump product line) 23,000 Depreciation of equipment (no resale value) 118,000 General factory overhead 40,000* Salary of product-line manager 125,000 Insurance on inventories 10,000 Purchasing department 44,000† Total fixed expenses 360,000 Net operating loss $ (74,000) *Common costs allocated on the basis of machine-hours. †Common costs allocated on the…
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: Thalassines Kataskeves, S.A. Income Statement—Bilge Pump For the Quarter Ended March 31 Sales $ 420,000 Variable expenses: Variable manufacturing expenses $ 122,000 Sales commissions 53,000 Shipping 12,000 Total variable expenses 187,000 Contribution margin 233,000 Fixed expenses: Advertising (for the bilge pump product line) 27,000 Depreciation of equipment (no resale value) 111,000 General factory overhead 48,000* Salary of product-line manager 122,000 Insurance on inventories 14,000 Purchasing department 43,000† Total fixed expenses 365,000 Net operating loss $ (132,000) *Common costs allocated on the basis of machine-hours. †Common costs allocated on the basis of…
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 PumpFor the Quarter Ended March 31 Sales $ 490,000 Variable expenses: Variable manufacturing expenses $ 129,000 Sales commissions 41,000 Shipping 16,000 Total variable expenses 186,000 Contribution margin 304,000 Fixed expenses: Advertising (for the bilge pump product line) 27,000 Depreciation of equipment (no resale value) 110,000 General factory overhead 40,000 * Salary of product-line manager 119,000 Insurance on inventories 11,000 Purchasing department 44,000 † Total fixed expenses 351,000 Net…
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencinglosses on its bilge pump product line for several years. The most recent quarterly contribution formatincome statement for the bilge pump product line follows:Thalassines Kataskeves, S.A.Income Statement—Bilge PumpFor the Quarter Ended March 31Sales ................................................................................................. €850,000Variable expenses:Variable manufacturing expenses ................................................. €330,000Sales commissions ....................................................................... 42,000Shipping ........................................................................................ 18,000Total variable expenses .................................................................... 390,000Contribution margin .......................................................................... 460,000Fixed expenses:Advertising…
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