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Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 925,000 $ 266,000 $ 401,000 $ 258,000 Variable manufacturing and selling expenses 468,000 117,000 192,000 159,000

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Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 925,000 $ 266,000 $ 401,000 $ 258,000 Variable manufacturing and selling expenses 468,000 117,000 192,000 159,000 Contribution margin 457,000 149,000 209,000 99,000 Fixed expenses Advertising, traceable 69,300 8,300 40,800 20,200 Depreciation of special equipment 43, 100 20,300 7,600 15, 200 Salaries of product-line managers 115, 700 40,800 39,000 35,900 Allocated common fixed expenses 185,000 53,200 80,200 51,600 Total fixed expenses 413, 100 122,600 167,600 122,900 Net operating income (105) $ 43,900 $ 26,400 $ 41,400 $ (23,900) "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 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required Required 2 > 7 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-ru profitability of the various product lines, Complete this question by entering your answers in the tabs below. ook 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. Totals Dirt Bikes Mountain Bike Racing Bikes Hint les Contribution margin (loss) Traceable foxed expenses 0 0 0 0 Print rences 0 Total traceable foxed expenses Product line segment margin (los) 0 0 0 0 $ o $ 0 $ 0 Net operating income (los) $ 0 (Required 2 Required

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