The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sa

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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 Sa 1 (51.96 KiB) Viewed 41 times

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 Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 929,808 $ 268,800 $ 484,000 $ 257,000 Variable manufacturing and selling expenses 471,000 115,800 201,000 155,000 Contribution nargin 458,000 153,000 203,000 102,000 Fixed expenses Advertising, traceable 69,200 8,100 40,100 21,000 Depreciation of special equipment 43,900 20,700 8,000 15,200 Salaries of product-line managers 114,800 40,700 38,700 35,400 Allocated common fixed expenses. 185,800 53,600 80,800 51,400 Total fixed expenses 413,700 123, 100 167,600 123,000 Net operating income (105) $ 44,300 $ 29,900 $ 35,400 $ (21,000) "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 tho 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: Required 2 Required What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial advantage (disadvantage per quarter $ 21,000) Required 2 >