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Return to question 2 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: 1.66 points Dirt Mountain Racing Total Bikes Bikes Bikes $ 927,000 $265,000 $ 404,000 $ 258,000 483,000 120,000 207,000 156,000 444,000 145,000 197,000 102,000 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) 69,100 8,800 43,400 20,300 115,400 40,600 185,400 53,000 413,300 122,700 30,700 $ 22,300 40,100 7,800 38,100 80,800 166,800 $ 30,200 20,200 15,300 36,700 51,600 123,800 $ (21,800) *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. Answer is complete but not entirely correct. 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? Financial (disadvantage) per quarter $ 47,200 Return to question 2 The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: 1.66 points Dirt Mountain Racing Total Bikes Bikes Bikes $ 927,000 $265,000 $ 404,000 $ 258,000 483,000 120,000 207,000 156,000 444,000 145,000 197,000 102,000 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) 69,100 43,400 115, 400 185,400 413,300 30,700 8,800 20,300 40,600 53,000 122,700 22,300 40,100 20, 200 7,800 15,300 38,100 36, 700 80,800 51,600 166,800 123,800 30,200 $ (21,800) *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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes No Return to question 2 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: 1.66 points Sales Dirt Mountain Racing Total Bikes Bikes Bikes $ 927,000 $ 265,000 $ 404,000 $ 258,000 483,000 120,000 207,000 156,000 444,000 145,000 197,000 102,000 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) 69,100 8,800 40,100 20, 200 43,400 20,300 7,800 15,300 115,400 40, 600 38,100 36,700 185,400 53,000 80,800 51,600 413,300 122,700 166,800 123,800 $ 30,700 $ 22,300 $ 30,200 $ (21,800) *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. Answer is complete but not entirely correct. 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 $ 927,000 460,000 467,000 Dirt Bikes Mountain Racing Bikes Bikes $ 265,000$ 404,000$ $ 258,000 112,000 & 194,000 154,000 153,000 210,000 104,000 Sales Variable manufacturing and selling expenses Contribution margin (loss) ) Traceable fixed expenses: Advertising Depreciation of special equipment Salaries of the product line managers Total traceable fixed expenses Product line segment margin (loss) ) Common fixed expenses Net operating income (loss) 68,800 x 8,100 43,900 X 20,800 X 115,400 40,400 X 228,100 238,900 $ 83,700 $ 185,400 53,500 40,600 X 7,600 X 38,300 86,500 123,500 $ 20,100 X 15,500 X 36,700 72,300 31,700 69,300 $