1 Exercise 11-2 (Algo) Dropping or Retaining a Segment (LO11-2] -800 The Regal Cycle Company manufactures three types of bicycles-3 dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 923,000 $ 265,000 $401.ca $ 257.000 Variable manufacturing and selling expenses 471,000 116,000 201.co 154,000 Contribution margin 452.000 149,000 200.00 103,cea Fixed expenses: Advertising, traceable 69,600 B, cea 40.800 20,400 Depreciation of special equipment 43,300 20,400 7.500 15.100 Salaries of product-Line managers 115,600 40,700 38.100 36,449 Allocated common fixed expenses 184,500 53, see 80,200 51,400 Total Fixed expenses 413, 100 122.500 166,900 123/100 Net operating incon (loss) $ 38,900 $ 26,500 $ 33,160 $ (20.700) Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale volue and does not wear out. Required: What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 2. Should the production and sale of racing bikes be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long run profitability of the various product lines. ferences Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial disadvantage per quartet Required 2 > Exercise 11-2 (Algo) Dropping or Retaining a Segment [LO11-2) The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sa expenses for the past quarter follow Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 923,000 $ 265,00 $ 401,000 $ 257,000 Variable manufacturing and selling expenses 471,000 116,000 2e1,eee 154,000 Contribution margin 452,800 149,000 200,000 103,000 Fixed expenses: Advertising, traceable 69,600 8,400 40,888 20,400 Depreciation of special equipment 43,300 20,400 7,800 15,100 Salaries of product-line managers 115,600 40,700 38,100 36,800 Allocated common fixed expenses 184,600 53,000 80,200 51,400 Total fixed expenses 413, 100 122,5ea 166,900 123, 780 Net operating income (loss) $ 38,900 $ 26,500 $ 33,180 $ (20,7ee) "Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to wheth the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wea Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 2. Should the production and sale of racing bikes be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the lo profitability of the various product lines mices Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes ONO ACC203 921 Managerial Accounting Saved leven Homework Assignment LUB AALU VAR Total fixed expenses Net operating income (loss) we 413, 100 $ 38,900 122,500 $ 26,500 166,900 $ 33, 100 123,700 $ (20,700) "Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 2. Should the production and sale of racing bikes be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines. Complete this question by entering your answers in the tabs below. ces Required 1 Required 2 Required 3 Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long run profitability of the various product lines. Totals Dirt Bikes Mountain Bike Racing Bikes o 0 0 Contribution margin (los) Traceable food expenses 0 0 Total traceable fixed expenses Product line segment margin (ons) 0 ols 05 05 0 5 0 Net operating income (1)