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please help with this The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales
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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 Total Dirt Bikes Bikes Racing Bikes Sales $ 926,000 $ 269,000 $ 405,000 $ 252,000 Variable manufacturing and selling expenses 468,000 116,000 197,000 155,000 Contribution margin 458,000 153,000 208,000 97,000 Fixed expenses Advertising, traceable 69,600 8,700 40.400 20,500 Depreciation of special equipment 44,000 20,400 8,000 15,600 Salaries of product line managers 115,900 40,000 38,300 36,800 Allocated common fixed expenses 185,200 $3,800 81.000 50,400 Total fixed expenses 414,200 123,200 167,700 123,300 Het operating income (100) 3:43.300 29,300 $ 40,300 6 126,300) "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 lection hy enterinn var answers in the the helow Step by Step Solution
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