Outdoor Luggage Corporation produces hard-sided luggage for sports equipment. Financial data for three of the corporation's most popular products appear below. Ski Guard Golf Guard Pishing Total Guard $ 933,000 $ 267,000 $ 407,000 $ 259,000 481,000 114,000 208,000 159,000 452,000 153,000 199,000 100,000 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) 69,300 8,900 40,300 20,100 44,100 20,600 7,600 15,900 116,400 40,600 38,900 36,900 186,600 53,400 81,400 51,800 416,400 123,500 168,200 124,700 $ 35,600 $ 29,500 $ 30,800 $ (24,700) *Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the fishing guards and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce fishing guards has no resale value and does not wear out. Required: 1. What the financial advantage (disadvantage) per quarter of discontinuing the fishing guard model? 2. Should the production and sale of fishing guards 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 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 Ski Guards Golf Guards Fishing Guards Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) Located in Kentucky, Cub Cadet which was founded in 1961 and manufactures lawnmowers and snowblowers. Cub Cadet has always produced the skid shoes for its snowblowers. An outside supplier has offered to sell the skid shoes to Cub Cadet for a cost of $35 per unit. Cub Cadet has accumulated the following financial information relating to its own cost of producing the skid shoe internally: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost 16,000 Units Per per Unit Year $ 13 $ 208,000 13 208,000 2 32,000 9+ 144,000 12 192,000 $ 49 $ 784,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the skid shoes, what would be the financial advantage (disadvantage) of buying 16,000 skid shoes from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the skid shoes were purchased, Cub Cadet could use the freed capacity to launch a new product. The segment margin of the new product would be $160,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 16,000 skid shoes from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Should the outside supplier's offer be accepted? Yes ONO Located in Kentucky, Cub Cadet which was founded in 1961 and manufactures lawnmowers and snowblowers. Cub Cadet has always produced the skid shoes for its snowblowers. An outside supplier has offered to sell the skid shoes to Cub Cadet for a cost of $35 per unit. Cub Cadet has accumulated the following financial information relating to its own cost of producing the skid shoe internally: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost 16,000 Units Per per Unit Year $ 13 $ 208,000 13 208,000 2 32,000 9* 144,000 12 192,000 $ 49 $ 784,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the skid shoes, what would be the financial advantage (disadvantage) of buying 16,000 skid shoes from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the skid shoes were purchased, Cub Cadet could use the freed capacity to launch a new product. The segment margin of the new product would be $160,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 16,000 skid shoes from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Yes ONO