SA Help Save & Exit Submit Check my work 2 Exercise 11-2 Dropping or Retaining a Segment (L011-2) 214 points 20922:43 Spoed 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 BX Bikes Bikes Sales 3924,000 $261,000 $ 410,000 253,000 Variable manufacturing and selling 475,000 110,000 197,000 160,000 Contribution margin 449,000 149.000 213,000 23,000 Fixed expenses Advertising, traceable 69,500 2,400 40,300 20,000 Depreciation of special equipment 43,00 20,500 7.500 15,400 salaries of product line managers 114.700 40.100 38,000 36,500 Allocated on fixed expenses 184,800 52,200 12.000 50,600 Total fixed expert 112.400 121,200 161, BOC 123,400 Het operating incon (los) 36,600 21,000 45,200 $60,400) Pri "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 property 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. 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? Required 1 Required 2 > ces 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? OYes ONO cos Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a property formatted segmented Income statement that would be more useful to management in assessing the long- run profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes 0 Contribution margin (loss) Traceable fixed expenses: 0 0 0 Total traceable fixed expenses Product line segment margin (los) 0 $ 0 $ Net operating income (los) $ 0 aces