- Total 933 000 Sales Mountain Bikes 409 000 201 000 208 000 Dirt Bikes 265 000 117 000 148 000 Racing Bikes 259 00 1 (50.16 KiB) Viewed 42 times
Total $933,000 Sales Mountain Bikes $ 409,000 201,000 208,000 Dirt Bikes $ 265,000 117,000 148,000 Racing Bikes $ 259,000 156,000 Variable manufacturing and selling expenses 474,000 459,000 Contribution margin 103,000 Fixed expenses: Advertising, traceable 69,500 8,200 41,000 20,300 43,200 20,900 7,100 15,200 114,900 40,100 38,100 36,700 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses 81,800 51,800 186,600 414,200 53,000 122,200 168,000. 124,000 Net operating income (lons) $ 44,800 $ 25,800 $ 40,000 $ (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 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?