Total $ 926,000 466,000 460,000 Dirt Bikes $ 264,000 118,000 146,000 Mountain Bikes $ 404,000 193,000 211,000 Racing Bikes $ 258,000 155,000 103,000 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 (loss) 69,500 43,600 113,400 185,200 411,700 $ 48,300 8,700 20,500 40,000 52,800 122,000 $ 24,000 40,500 7,600 38,200 80,800 167, 100 $ 43,900 20,300 15,500 35,200 51,600 122,600 $ (19,600) *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 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 Total $ 926,000 466,000 460,000 Dirt Bikes $ 264,000 118,000 146,000 Mountain Bikes $ 494,000 193,000 211,000 Racing Bikes $ 258,000 155,000 103,000 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 (loss) 69,500 43,600 113,400 185,200 411,700 $ 48,300 8,700 20,500 40,000 52,800 122,000 $ 24,000 40,500 7,600 38,200 80,800 167,100 $ 43,900 20,300 15,500 35,200 51,600 122,600 $ (19,600) *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?
