Check my w Exercise 11-2 Dropping or Retaining a Segment (LO11-2] 0.71 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: points Dirt Mountain Racing Total Bikes Bikes Bikes $ 918,000 $263,000 $ 400,000 $ 255,000 479,000 111,000 209,000 159,000 439,000 152,000 191,000 96,000 eBook Hint 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) 70,500 8,900 41,000 20,600 43,300 20,300 7,100 15,900 114,700 40,400 39,000 35,300 183, 600 52,600 80,000 51,000 412,100 122,200 167,100 122,800 $ 26,900 $ 29,800 $ 23,900 $(26, 800) Print References *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. Net operating income (loss) $ 26,900 $ 29,800 $ 23,900 $(26, 800) *Allocated on the basis of sales dollars. 0.71 points 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. eBook 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. Hint Complete this question by entering your answers in the tabs below. Print Required 1 Required 2 Required 3 References What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Required 1 Required 2 > Che Allocated common fixed expenses* Total fixed expenses Net operating income (loss) 183, 600 52,600 80,000 51,000 412,100 122,200 167,100 122,800 $ 26,900 $ 29,800 $ 23,900 $(26,800) 0.71 points *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. eBook 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. Hint Complete this question by entering your answers in the tabs below. Print Required 1 References Required 2 Required 3 Should the production and sale of racing bikes be discontinued? OYes Ono Required 1 Required 3 > 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. 0.71 points Complete this question by entering your answers in the tabs below. eBook Required 1 Required 2 Required 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. Print Totals Dirt Bikes Mountain Bikes Racing Bikes Sales References 0 0 0 0 Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) 0 0 0 0 0 0 $ $ $ Net operating income (loss) Required 2 Required 3
