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The Wheels R' Us Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for
The Wheels R' Us 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: 02:20:26 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: eBook Hint Advertising, traceable: Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) References "Allocated on the basis of sales dollars. Total $ 928,000 467,000 Dirt Bikes $ 269,000 114,000 Mountain Bikes $ 408,000 Racing Bikes $251,000 461,000 155,000 198,000 210,000 155,000 96,000 70,100 8,800 40,400 20,900 43,200 20,100 7,300 15,800 115,300 40,900 38,400 36,000 185,600 53,800 81,600 50,200 414,200 123,600 167,700 122,900 $ 46,800 $ 31,400 $42,300 $(26,900) 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? Put in a negative number with a "-" sign to indicate a financial disadvantage. 2. Should the production and sale of racing bikes be discontinued? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter
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