Chapter 12 - Homework 6 Help Save & Exit Submi Check my work Exercise 12-2 Dropping or Retaining a Segment (LO12-2] 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 $ 300,000 120,000 180,00 Dirt Bikes $90,000 27000 6,00 Mountain Racing Bikes Bikes $150,000 $60,000 0.000 33.000 0,00 22.000 Variable manufacturing and selling expenses Contribution sarcin Fixed expenses Advertising, traceable Depreciation of special equipment Salaries of product line managers Allocated common Fixed expenses Total Fixed expenses Net operating income (less) ,000 8,000 10, 30,0 10, 0 14,000 23, 6,000 ,000 35, 12, 13, 59,00 10.00 10.000 148, 46,000 $ 32,000 $17,00 $ 24,00 "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 Bkes? 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. 16 Advertising, traceable Depreciation of special equipment Salaries of product line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) 30. 23,600 35,000 60.000 148,000 32.000 10. eee 6,000 12.000 18.000 46,eee $17,00 $ 14.000 9, 0 13,eee 30, eee 66,600 24,000 6,eee 8,eee 10,000 12, eee 36,000 (9,808) $ $ 0.42 points "Allocated on the basis of sales dollars. eBook 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 > Advertising, traceable Depreciation of special equipment Salaries of product line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) 30.000 23,000 35,000 60.000 148.000 32,000 10.000 6.000 12,000 18.000 46,000 $17,00 $ 14.000 9.000 13,000 30.000 66.000 24,000 $ 8,000 10,000 12.000 36,000 (9.000) $ "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 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. 0.42 points Required 1 Required 2 Required 3 Required s eBook 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 References Contribution margin (loss) Traceable fixed expenses Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)
