Help 1 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: OOK int int ce Mountain Total Dirt Bikes Bikes Racing Bikes Sales $.923,000 $ 262,000 5 403,000 $ 250,000 Variable manufacturing and selling expenses 471,000 118.000 198.000 155,000 Contribution margin 452,000 144,000 205,000 103.000 Taxed expenses Advertising, traceable 69,500 8,500 40,400 20,600 Depreciation of special equipment 44.400 20,800 7,700 15,900 Salaries of product-line managers 115,800 40,600 30,000 36,400 Allocated common fixed expenses 184,600 52,400 80,600 51.600 Total fixed expenses 424,300 122,300 167,500 124,500 Net operating income (10) $ 37,700 $21,700 $ 37,500 $ 121,500) "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? 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 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Prev 1 of 3 !!! Next > "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 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 > Prey 1 of 3 !!! Next > Net operating Income (loss) $ 37,700 $ 21,700 $ 37,500 $ (21,500) "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 w the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not 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 to profitability of the various product lines. 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 O No ule 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 lo 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 Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (105)
