11.Subject:- Accounting Thalassines Kataskeves, SA, 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 product line follows:SalesVariable expensesVariable manufacturing expensesSales comissionsShippingTotal variable expensesContribution marginThalassines Kataskeves, S.A.Income Statement-611ge PumpFor the Quarter Ended, March 31Fived expenses:Advertising (for the hilge pump product line)Depreciation of equipment (no resale value)General factory overheadSalary of product line managerInsurance on InventoriesPurchasing departmentTural fixed aupances$ 126,00045,00024,00024,000112,00040,000115,00044,000$500,000195,000105,000343,000$ (37,000)"Common costs allocated on the basis of machine-hours1Common costs allocated on the basis of sales dollarsDiscontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company's *Common costs allocated on the basis of machine-hours.*Common 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'stotal general factory overhead or total Purchasing Department expensesRequired:What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?

Even if a product ceases to exist, there may be depreciation, contractual commitments, and other…

Answered: Thalassines Kataskeves, S.A, of Greece…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 16E

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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 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…
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