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$933,000 $268,000 $ 409,000 $ 256,000 468,000 112,000 205,000 151,000 465,000 156,000 204,000 105,000 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising,
$933,000 $268,000 $ 409,000 $ 256,000 468,000 112,000 205,000 151,000 465,000 156,000 204,000 105,000 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) 69,400 8,300 40,900 20,200 43,200 20,400 7,200 15,600 114,900 40,600 38,100 36,200 186,600 53,600 81,800 51,200 414,100 122,900 168,000 123,200 $ 50,900 $ 33,100 $ 36,000 $(18,200) "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. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? OYes O No 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 Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)
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