The Regal Cycle Company manufactures three types of bicycles a dirt bike, mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Dirt $921,000 47100 450 800 Bikes $266, 119.000 147 000 Mountain Bikes Bikes 405,8802 5e, 600 200 000 152 e 205 69 98.80 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) 68,988 8 , 480 48,280 28,388 44, 5 2 0,900 7,600 16,90 115, eee 40, 6ee38,78e 35, 788 184, 20053 200 O See 1412600 123 180 1675e 122.ee 32,400 $ 23,990 37,5ee $(24,889) $ 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. secured Required That is the finance advantage ( advantage) per quarter of discontinuing the Racing Bikes beguir 2 > "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 no 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 Should the production and sale of racing bikes be discontinued? 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 (loss)
