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:SalesVariable expenses:Variable manufacturing expensesSales commissionsShippingTotal variable expensesContribution marginiThalassines Kataskeves, S.A.Income Statement-Bilge PumpFor the Quarter Ended March 31Fixed expenses:Advertising (for the bilge pump product line)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.$ 130,00054,00021,00022,000115,00036,000120,00014,00057,000$ 440,000Required:What is the financial advantage (disadvantage) of discontinuing the bilge pump?205,000235,000364,000$ (129,000)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.

Due to the fact that income and expenses differ depending on the kind of business or operations,…

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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…
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 $ 139,000 Sales commissions 42,000 Shipping 17,000 Total variable expenses 198,000 Contribution margin 292,000 Fixed expenses: Advertising (for the bilge pump product line) 30,000 Depreciation of equipment (no resale value) 119,000 General factory overhead 43,000 * Salary of product-line manager 114,000 Insurance on inventories 8,000 Purchasing department 56,000 † Total fixed expenses 370,000 Net…
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 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. $ 135,000 45,000 11,000 29,000 102,000 38,000* 126,000 15,000 50,000+ $ 430,000 191,000 239,000 360,000 $ (121,000) Discontinuing the bilge pump product line would…
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 product line follows: Thalassines Kataskeves, S.A.Income Statement—Bilge PumpFor the Quarter Ended March 31 Sales $ 440,000 Variable expenses: Variable manufacturing expenses $ 122,000 Sales commissions 52,000 Shipping 24,000 Total variable expenses 198,000 Contribution margin 242,000 Fixed expenses: Advertising (for the bilge pump product line) 21,000 Depreciation of equipment (no resale value) 107,000 General factory overhead 46,000* Salary of product-line manager 119,000 Insurance on inventories 7,000 Purchasing department 49,000† Total fixed expenses 349,000 Net operating loss $ (107,000) *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 product line 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: $ 480,000 $ 136,000 50,000 16,000 202,000 278,000 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. 27,000 107,000 * 47,000 115,000 10,000 58,000+ 364,000 $ (86,000) Discontinuing the bilge pump product line would…
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 follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: $ 430,000 Variable manufacturing expenses $ 137,000 Sales commissions 47,000 Shipping 18,000 Total variable expenses 202,000 Contribution margin 228,000 Fixed expenses: Advertising (for the bilge pump product line) 24,000 103,000 49,000* 121,000 13,000 46,000+ 356,000 $ (128,000) 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. Discontinuing the bilge pump would not affect sales of other…
H. The Retread Tire Company recaps tires. The fixed annual cost a tire is $9.00. The company charges $25 to recap a tire. the recapping operation is $60,000. The variablec ost or recapping a) For an annual volume of 12,000 tires, determine the total cost, total revenue, and profit. b) Determine the annual break-even volume for the Retread Tire Company operation. c) Determine the contribution margin. d) If the maximum operating capacity of the Retread Tire Company, is 8,000 tires annually, determine the break-ev percentage of that capacity. en volume as a Fixed cost = Variable cost = In the Formula, box type in the formula in word calculate the answer. s that you used to Price = a) V= TC= TR= Formula: Fomula: Fomula: Profit= per year b) V = tires per year Fomula: c) What is the Contribution Margin? Fomula: d) сарасity%3D % cf capacity = Fomula:
One of ABC product line has been unprofitable for the past 18 months. The latest monthly income statement for the product line is as follows: Sales revenue 19,000 Less: Cost of sales 8,500 Gross profit 10,500 Operating expenses Depreciation 2,750 Insurance 1,400 Manager salary 1,100 Supplies 1,750 Utilities 1,100 Wages 5,000 Total operating expenses 13,100 Profit or loss (2,600) In relation to the operating expenses, utilities, manager salary and $2,000 of the depreciation expense are allocated to this product line. Required: Assume that the sales of other product lines will not be affected by the decision, evaluate whether the unprofitable product line should be disestablished from a financial standpoint.
Les Objets Volants (LOJ), S.A., of France, makes aircraft equipment. The company has been experiencing losses on its fuel pump product line for several years. The most recent quarterly income statement for the fuel pump product line follows: Sales Less: Variable expenses: LES OBJETS VOLANTS S.A. Income Statement-Fuel Pump For the Quarter Ended March 31 Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Less: Fixed expenses: Advertising Depreciation of equipment (no resale value) General factory overhead Salary of product-line manager Insurance on inventories Purchasing department expenses Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. *common costs allocated on the basis of sales dollars. Net advantage (disadvantage) of dropping the line € 320,000 66,000 14,000 Should the fuel pump product line be discontinued? 290,000 90.000 149,000* 38,000 18,000 65,000+ € 1,000,000 € 400,000 600,000…
Whirly Corporation's contribution format Income statement for the most recent month is shown below: Sales (8,400 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 260,400 168,998 Required: (Consider each case independently): 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income 55, 188 Per Unit $ 31.08 11.09 1. What would be the revised net operating Income per month of the sales volume Increases by 70 units? 2. What would be the revised net operating income per month if the sales volume decreases by 70 units? 3. What would be the revised net operating income per month if the sales volume is 7,400 units?

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