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please help!! The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses
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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: Mountain Racing Bikes Total Dirt Bikes Diken Sales $924,000 $ 262,000 $ 406,000 $ 256,000 Variable manufacturing and selling expenses 402.000 119,000 200.000 155.000 Contribution margin 442,000 143.000 198,000 101.000 Pixed expenses Advertising. traceable 69,700 9,000 40.200 20,500 Depreciation of apoial equipment 44,000 20,300 76900 15,00 Salaries of product line managers 115,000 40,200 38,800 36.000 Allocated common fixed expenses 184.800 52,400 81200 51200 Total fixed expenses 413,500 121,900 168 100 123,500 Het operating incon (lous) $ 28,500 $ 21,100 5.29,900 $. (22,500) "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 segmentod 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 Tequired Required What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 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 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. Totais Dirt Bikes Mountain Bike Racing Blikes 0 o O Contnbution margin (los) Traceable food expenses 0 Total traceable foxed expenses Product line segment margin (loss) 0 0 015 0 05 05 0 Net operating income 0 Step by Step Solution
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