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Dirt Bikes Mountain Bikes Racing Bikes $ 928,000 $266,000 $ 403,000 $ 259,000 Total Sales Variable manufacturing and selling 477,000 112,000 209,000 156,000 expenses Contribution

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Dirt Bikes Mountain Bikes Racing Bikes $ 928,000 $266,000 $ 403,000 $ 259,000 Total Sales Variable manufacturing and selling 477,000 112,000 209,000 156,000 expenses Contribution margin Fixed expensen: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) 451,000 154,000 194,000 103,000 69,800 44,400 116,400 185,600 416,200 $ 34,800 $ 30,500 $ 26,800 $(22,500) 8,600 20,900 40,800 53,200 123,500 40,300 7,600 38,700 80,600 167,200 20,900 15,900 36,900 51,800 125,500 "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. 3. Prepare a perly profitability of the various product lines. Complete this question by entering your answers in the tabs below. Required 3 Required 2 Required 1 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Saved Help Save the iine snouid be discontinuea. ine special equipment used to produce racing bikes nas no resaie vaiue ana aoes not wE 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 profitability of the various product lines. Complete this question by entering your answers in the tabs below. Required 3 Required 1 Required 2 Should the production and sale of racing bikes be discontinued? Yes ONO ( Required 1 Required 3 ............................. ........ Required 1 Required 2 Required 3 Prepare a properly formatted segmented income statement that would be more useful to management in assessing run profitability of the various product lines. Mountain Bikes Totals Dirt Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses 0. $4 24 %24 Product line segment margin (loss) Net operating income (loss) 2$ Next > 1 of 3 Drev

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