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Ch The Regal Cycle Company manufactures three types of bicycles a dirt bike, a mountain bike, and a racing bike Data on sales and expenses

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Ch 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 $ 921,000 $266,000 $ 404,000 $ 251,000 458,000 114,000 193,000 151,000 463,000 152,000 211,000 100,000 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) 78,200 8,9ee 40,600 20,700 44,000 20,800 7,800 15,480 113,600 40, 100 38,100 35,400 184,200 53,200 80,800 50.200 412,000 123,000 167,300 121,780 $ 51,000 $ 29,000 $ 43,700 $(21,700) *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 C Total fixed expenses Net operating income (loss) 412.000 123,000 167,300 121,700 $ 51,000 $ 29,000 $43,700 $(21,700) "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 What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Financial (disadvantage) per quarter 51.000 Required 2 > $ Prey 2 of 4 !!! Next >

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