Chap 11: Exercises (pt) Saved Hel 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: 0.2 points Total $ 90,000 462,000 468,000 Dit Bike $ 270,000 113,000 157.000 Mountain Bikes 5.408,000 196,000 212.000 Racing Bikes $ 252,000 153,000 99.000 8 21.00 Sales Variable manutacturing 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) 69.000 43,900 114,000 186.000 412,900 5 55,100 8,400 20,900 40,300 54,000 122.600 $ 33.400 40,300 7.300 38,300 81,600 167,500 $44,500 20,300 15,700 35,400 50,400 121.800 5 (22,800) eBook Print "Allocated on the basis of sales dollars. References 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? ure long run 01:20:49 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Book 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. Print Totals Dirt Bikes Mountain Bikes Racing Bikes erences Contribution margin (loss) Traceable fixed expenses: Total traceable foxed expenses Product line segment margin (1058) Net operating income (loss)