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EXERCISE 6-15 Dropping or Retaining a Segment L06-2 encing losses on its bilge pump product line for several years. The most recent quarterly contribu- Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experi- tion format income statement for the bilge pump product line follows: Sales.. Variable expenses: Variable manufacturing expenses. Sales commissions. Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Company Shipping... bundait 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. $330,000 42,000 18,000 270,000 80,000 105,000* 32,000 8,000 45,000* leder $850,000 bor ef 390,000 460,000 SA 540,0002 $ (80,000) 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 Depart- ment expenses. wollot Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line? nobenod

EXERCISE 6-15 Dropping or Retaining a Segment L06-2 encing losses on its bilge pump product line for several years. The most recent quarterly contribu- Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experi- tion format income statement for the bilge pump product line follows: Sales.. Variable expenses: Variable manufacturing expenses. Sales commissions. Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Company Shipping... bundait 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. $330,000 42,000 18,000 270,000 80,000 105,000* 32,000 8,000 45,000* leder $850,000 bor ef 390,000 460,000 SA 540,0002 $ (80,000) 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 Depart- ment expenses. wollot Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line? nobenod

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 3E: Differential analysis for a discontinued product A condensed income statement by product line for...
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EXERCISE 6-15 Dropping or Retaining a Segment L06-2 encing losses on its bilge pump product line for several years. The most recent quarterly contribu- Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experi- tion format income statement for the bilge pump product line follows: Sales. Variable expenses: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Variable manufacturing expenses. aindly Sales commissions. Shipping..... buldott 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 91 Insurance on inventories.. 21Purchasing department. 1d Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. + Common costs allocated on the basis of sales dollars. $330,000 42,000 18,000 270,000 80,000 105,000* 32,000 8,000 45,000+ $850,000 390,000 460,000 540,000 $ (80,000) 77) 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 Depart- 1800 gnistsqo gniwollol ment expenses. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?
Transcribed Image Text:EXERCISE 6-15 Dropping or Retaining a Segment L06-2 encing losses on its bilge pump product line for several years. The most recent quarterly contribu- Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experi- tion format income statement for the bilge pump product line follows: Sales. Variable expenses: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Variable manufacturing expenses. aindly Sales commissions. Shipping..... buldott 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 91 Insurance on inventories.. 21Purchasing department. 1d Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. + Common costs allocated on the basis of sales dollars. $330,000 42,000 18,000 270,000 80,000 105,000* 32,000 8,000 45,000+ $850,000 390,000 460,000 540,000 $ (80,000) 77) 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 Depart- 1800 gnistsqo gniwollol ment expenses. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?
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