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answer all 3 required parts Exercise 11-2 (Algo) Dropping or Retaining a Segment (L011-2] The Regal Cycle Company manufactures three types of bicycles-a dirt bike,
answer all 3 required parts Exercise 11-2 (Algo) Dropping or Retaining a Segment (L011-2] The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow Total $929,000 470.000 459,000 Dirt Bikes $ 269,000 113,000 156,000 Mountain Bikes $ 406,000 205,000 201,000 Racing Bikes $ 254,000 152.000 102,000 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 foss) 69,600 43,100 114,900 155,800 413.400 $ 45,600 8.500 20,300 40,200 53.800 122,800 5 33,200 40,600 7.400 38,700 81,200 167.900 5.3,100 20,500 15,400 36,000 50.800 122,700 5 (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. Required: Required 2 Required 3
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