14 product ine for several years The most recent income staterment for the bige

Question

14 product ine for several years The most recent income staterment for the bige pomp peoduct ine tllows Insurance on uet operat ing ess Common costs allocated on the baus of machine hours TCommon costs allocated on the basis of sales dolars Discontinuing the bilge pump product line would not affect sales of other product ines and would have no eflect on the company's otal general factory overhead or total Purchasing Department expenses What is the financial advartage (dsadvantage) of disconteuing the bige pump product ane? up

Explanation / Answer

Loss in contribution margin ($263000) Savings in avoidable fixed cost: Advertising 29000 Salary of product-line manager 115000 Insurance on inventories 8000 Financial advantage (disadvantage) of discontinuing the bilge pump product line ($111000)

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