Answer Happy

Total $ 930,000 Mountain Bikes $ 405,000 Dirt Bikes $ 266,000 117,000 Racing Bikes $ 259,000 Sales Variable manufacturing and selling 474,000 202,000 155,000 expenses 456,000 149,000 Contribution margin Fixed expenses: 203,000 104,000 Advertising, traceable. 70,000 8,600 40,500 20,900 43,300 20,900 7,100 15,300 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses 116,400 41,000 38,600 36,800 186,000 53,200 81,000 51,800 415,700 123,700 167,200 124,800 Net operating income (loss) $ 40,300 $ 25,300 $ 35,800 $ (20,800) *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? Required t Required 2 >
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? OYes ONO < Required 1 Required 3 >
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 0 0 0 Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses 0 Product line segment margin (loss) 0 Net operating income (loss) < Required 2 0 0 0 S 0 0 0 $ Required 3 x 0 0 $