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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 Dit Mountain Racing Total Bikes Bikes Bikes $ 925,000 $269,000 $ 406,000 $250, 4730 117.00 200,000 156. 452,000 152,00 206,000 94,000 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 (lons) 69,500 8,400 40,000 20, 500 43,20 20,400 7,800 15,500 114,700 40,200 38,300 35,700 185.000 53, 1100 81,200 50, 112.900 122.00 160,640 121,500 599,100 29,200 517.400 (27.500) "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? 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. Required 1 Required 2 Required What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Should the production and sale of racing bikes be discontinued? Yes ONO 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 0 Contribution margin (loss) Traceable foxed expenses 0 0 Total traceable fixed expenses Product line segment margin (loss) 0 0 0 0 0 $ 0 $ 0 $ 0 Net operating income (loss) $ 0
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