Answer Happy

Fixed expenses: 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 Sales For the Quarter Ended March 31 Variable expenses: $ 460,000 Variable manufacturing expenses $ 132,000 Sales commissions 41,000 Shipping 10,000 Total variable expenses 183,000 Contribution margin 277,000 Advertising (for the bilge pump product line) 28,000 Depreciation of equipment (no resale value) 113,000 General factory overhead 34,000" Salary of product-Line manager 115,000 Insurance on inventories 7.880 Purchasing department 42,eeet Total fixed expenses 339,000 Net operating loss $ (62,000) "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: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?