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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 Bikes 450,000 $ 261,000 110,000 151,000 Mountain Bikes $ 404,000 208,000 196,000 Racing Bikes $ 254,000 151,000 103,000 69,200 8,600 40,200 20,400 43,300 20,500 7,200 15,600 115,200 40,700 38,100 36,400 183,800 52,200 80,800 50,800 411,500 122,000 166,300 123,200 $ 38,500 $ 29,000 $ 29,700 $ (20,200) 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 Total $ 919,000 469,000 Net operating income (loss) "Allocated on the basis of sales dollars. Print erences 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? Financial (disadvantage) per quarter Required 2 > 60 1 ints Book Hint "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. Ask Required 1 Required 21 Required 3 Print 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. References Sales Contribution margin (loss) MC Traceable fixed expenses Total traceable fixed expenses Product line segment margin (loss) Net operating income doss) Totals: Dirt Bikes Mountain Bikes Racing Bikes $
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