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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 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 hikes Bus $927,000 526),000 5406,000 $ 258,000 453,000 119,000 192,000 152,000 454,000 160.000 210.000 106,000 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 Het operating income (10) 68,700 8.100 40.500 20,100 43,500 20,400 7,200 15.500 115,600 40,400 39.000 36,200 185,00 52,600 81,200 $1,600 413,200 121.900 167.900 123, 400 $ 50,800 $ 22,100 $4,100 $(17.400) "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. 16 tv NRA w 2 Required: the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. 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 3 Required: Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Financial (disadvantage) per quarter Required 2 > Required Required 2 Red Prepare a property formed and income statement that would be more useful to management in assessing the long run profitability of the various product lines Det . . Contribution margin Tracbifend expenses . Total trestled expenses Product line segment margin() 0 05 0 $ Net operating Incomeos) (Required 2 O 16 MacBook Air Bo 228 A % $ %2 3 & 7 2 5 8 4 6 9 W E 70 T Y U S D F G H J K C V B N. M
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