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D ELL. LuuldLIUM.CUM IUWLUTLULILIT ework Saved Help Dirt Mountain Racing Total Bikes Bikes Bikes $ 917,000 $262,000 $ 405,000 $ 250,000 461,000 113,000 196,000 152,000
D ELL. LuuldLIUM.CUM IUWLUTLULILIT ework Saved Help Dirt Mountain Racing Total Bikes Bikes Bikes $ 917,000 $262,000 $ 405,000 $ 250,000 461,000 113,000 196,000 152,000 456,000 149,000 209,000 9 8,000 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) 69,800 8,700 40,800 20,300 43, 400 20,500 7,600 15,300 114,800 40,100 36,000 183,400 52,40081,000 50,000 411,400 121,700 168,100121,600 $ 44,600 $ 27,300 $ 40,900 $(23,600) *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 3
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