Discontinuing the bilge pump product will bringabout financial disadvantage of $150,000.
What is product line?
Product line serves as group of products which is been marketed under a brand.
To know if it will be a financial advantage or (disadvantage) if discontinuing the bilge pump product line, then let's calculate the fixed cost.
[tex]The Fixed cost savings can be calculated as[270,000 + 32,000 + 8,000]= $310,000[/tex]
Since the company is at a loss of $460,000
Contribution Margin, then the the the fixed costs saved, which is less [460,000) + 310,000]
[tex]= ($150,000)[/tex]
Therefore, Discontinuing the bilge pump product will bring about financial disadvantage of $150,000.
CHECK THE COMPLETE QUESTIONS BELOW;
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 (for the bilge pump product line) 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: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?
Learn more about product line at;
https://brainly.com/question/16344357
