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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 StatementBilge Pump For the Quarter Ended March 31
Sales		$ 490,000
Variable expenses:
Variable manufacturing expenses	$ 128,000
Sales commissions	42,000
Shipping	16,000
Total variable expenses		186,000
Contribution margin		304,000
Fixed expenses:
Advertising (for the bilge pump product line)	21,000
Depreciation of equipment (no resale value)	112,000
General factory overhead	34,000*
Salary of product-line manager	121,000
Insurance on inventories	13,000
Purchasing department	53,000
Total fixed expenses		354,000
Net operating loss		$ (50,000)

*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 companys total general factory overhead or total Purchasing Department expenses.

Required:

What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?

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