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: Total $ 920,000 469,000 451,000 Dirt Bikes $261,000 115,000 146.000 Mountain Bikes $ 408,000 203,000 205,000 Racing Bikes 5251,000 151,000 100,000 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 (108) 69,300 43,700 115,400 184,000 412,400 $ 38,600 8,200 20,100 40,700 52,200 121,200 $ 24,800 40,200 7,700 38,200 81,600 167, 700 $ 37,300 20,900 15.900 36,500 50.200 123.500 $(23,500) "Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants o 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 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. Prey 1 of 6 Next > Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does 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 assessin profitability of the various product lines. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a properly formatted segmented income statement that would be more useful to management in assessing the i 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)
