Managerial Accounting: E12-15 Thalassines Kataskeves, S.A., of Greece makes marine equipment

Managerial Accounting 
E12-15 Dropping or Retaining a Segment 
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 
Sales 850,000 
Variable expenses: 
     Variable manufacturing expenses 330,000 
     Sales commissions 42,000 
     Shipping 18,000 
Total variable expenses 390,000 
Contribution margin 460,000 
Fixed expenses: 
     Advertising 270,000 
     Depreciation of equipment (no resale value) 80,000 
     General factory overhead* 105,000 
     Salary of product-line manager 32,000 
     Insurance on inventories 8,000 
     Purchasing department† 45,000 
Total fixed expenses 540,000 
Net operating loss $(80,000) 
*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's total general factory overhead or total Purchasing Department expenses. 

Required: 
a. Compute the increase or decrease of net operating income if the bilge pump product line are continued or discontinued. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive except Decreases in Sales, Decreases in Contribution Margin, and Net Losses which should be indicated by a minus sign. Omit the "€" sign in your response.) 
b. Would you recommend that the bilge pump product line be discontinued?
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