apter 11 Exercises Saved Help 1 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: Dirt Mountain Racing Total Bikes Bikes Bikes $ 300,000 $90,000 $150,000 $ 60,000 120,000 27.000 60,000 33,000 180,000 63,000 90,000 27,000 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 (10) Book 30,000 10,000 14,000 6,000 23,000 6,000 9,000 8,000 35,000 12,000 13,000 10,000 50,000 18.000 30.000 12,000 148,000 46,000 66,000 36,000 $ 32,000 $17,000 $ 24,000 $ (9,000) Hint Print "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. Ferences 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? xercises Saved $ 300,000 $90,000 $150,000 $ 120,000 27,000 60,000 180,000 63,000 90,000 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) 30,000 10,000 14,000 23,000 6,000 9,000 35,000 12,000 13,000 60,000 18,000 30,000 148,000 46,000 66,000 $ 32,000 $ 17,000 $ 24,000 $ *Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and want the line should be discontinued. The special equipment used to produce racing bikes has Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the racing bil- 2. Should the production and sale of racing bikes be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful t profitability of the various product lines. 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 No Required 3 >