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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

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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 past quarter follow: Dirt Mountain Racing Total Bikes Bikes Bikes $936,000 $270,000 $408,888 S 258,000 474,000 114,000 207.000 153,000 462,000 156,000 201,000 105,000 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-Line managers Allocated connon fixed expenses Total fixed expenses Net operating income (loss) 69, 700 8,200 40,900 20,680 43,300 20,200 7,400 15,700 114,600 41,000 38,400 35,200 187,200 54,800 81,600 51,600 414,800 123,400 168,300 123, 180 $ 47,200 $ 32,600 $ 32,700 S(18,108) "Allocated on the basis of soles 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 rocing 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, Check Advertising, traceable Depreciation of special equipment Salaries of product-Line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) 69,700 8,200 40,900 20,600 43,300 20, 200 7,400 15,700 114,600 41,000 38,400 35,200 187,200 54,000 81,600 51,600 414,800 123,400 168,300 123, 100 $ 47,200 $ 32,600 $ 32,700 $(18,100) "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 2 > Check 2 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) 69,700 8,200 40,900 20,600 43,300 20,200 7,400 15,700 114,600 41,000 38,400 35,200 187,200 54,000 81,600 51,600 414,888 123,400 168,300 123, 100 $ 47,200 $ 32,600 $ 32,700 $(18,100) 142 boints eBook Print "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. References 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 No Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 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. ook Totals Dirt Bikes Mountain Bikes Racing Bikes mences Contribution margin (loss) Traceable fixed expenses Total traceable fixed expenses Product line segment margin (s) Not operating income (los)

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