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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: Dirt Mountain Racing Total Bikes Bikes Bikes Sales $922,000 $264,000 $407,000 $ 251,000 Variable manufacturing and 472,000 114,000 206,000 152,000 selling expenses Contribution margin450,000 150,000 201,000 99,000 Fixed expenses: Advertising, 69,300 8,600 40,500 20,200 traceable Depreciation of 43,100 20,200 7,500 15,400 special equipment Salaries of product-line 114,500 40,500 38,400 35,600 managers Allocated common 184,400 52,800 81,400 50,200 fixed expenses* Total fixed expenses 411,300 122,100 167,800 121,400 Net operating income $ 38,700 $ 27,900 $ 33,200 $ (22,400) (loss) *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. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required Required Required What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors-home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow: Meals House- Home On keeping Total Nursing Wheels $919,000 $265,000 $402,000 $ 252,000 459,000 111,000 194,000 154,000 460,000 154,000 208,000 98,000 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) 69, 700 43,900 116,200 8,900 20,400 41,000 40,300 8,000 38,700 2 0, 500 15,500 36,500 183,800 53,000 80,400 50,400 413,600 123,300 167,400 122,900 $ 46,400 $ 30,700 $ 40,600 $ (24,900) *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $46,400 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program. The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided. Required: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. Should the Housekeeping program be discontinued? 2-a. Prepare a properly formatted segmented income statement. 2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Financial (disadvantage) 72,500