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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: 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) Dirt Mountain Racing Total Bikes Bikes Bikes $930,000 $270,000 $408,000 5 252,000 477,000 115,000 203,000 159,000 453,000 155,000 205,000 93,000 69,900 8,700 40,300 20,900 44,300 21,000 7,600 15,789 115,900 40,700 38,500 36,700 186,000 54,000 81,600 50,400 416, 100 124,400 168,000 123,700 $ 36,900 $ 30,600 $ 37,000 $(30,700) "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? RAM Required 2 > Prev 1 of 8 Next > 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 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated conmon fixed expenses Total fixed expenses Net operating income (loss) Dirt Mountain Racing Total Bikes Bikes Bikes $930,000 $270,000 $408,000 $ 252,000 477,000 115,000 203,000 159,000 453,000 155,000 205,000 93,000 69,900 8,700 40,300 20,900 44,300 21,000 7,600 15,700 115,900 40,700 38,500 36,700 186,000 54,000 81,600 50,400 416, 100 124,400 168,000 123,700 $ 36,900 $ 30,600 $ 37,000 $(30,700) "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 Requita 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes ONO RULLAT Total fixed expenses Net operating income (loss) 416, 100 124,400 168,000 123,700 $ 36,900 $ 30,600 $ 37,000 $(30,700) "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 Bike Racing Bikes 0 0 0 0 Contribution margin (loss) Traceable fixed expenses + FI 0 0 0 Total traceable foxed expenses Product line segment margin (loss) 0 $ 0 $ 0 $ 0 Net operating income (oss) $ 0

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