expenses for the past quarter follow: types Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Total $ 932,000 471,000 461,000 69,700 44,000 Dirt Bikes $ 265,000 118,000 147,000 115,700 186,400 415,800 $ 45,200 Mountain Bikes $ 408,000 200,000 208,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) *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 whet Racing Bikes $ 259,000 153,000 106,000 9,000 40,300 20,900 8,000 40,700 38,400 53,000 81,600 123,600 168,300 $ 23,400 $ 39,700 $ (17,900) 20,400 15,100 36,600 51,800 123,900
expenses for the past quarter follow: types Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Total $ 932,000 471,000 461,000 69,700 44,000 Dirt Bikes $ 265,000 118,000 147,000 115,700 186,400 415,800 $ 45,200 Mountain Bikes $ 408,000 200,000 208,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) *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 whet Racing Bikes $ 259,000 153,000 106,000 9,000 40,300 20,900 8,000 40,700 38,400 53,000 81,600 123,600 168,300 $ 23,400 $ 39,700 $ (17,900) 20,400 15,100 36,600 51,800 123,900
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
![Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare a properly formatted segmented income statement that would be more useful to management in assessing the lo
profitability of the various product lines.
Contribution margin (loss)
Traceable fixed expenses:
Total traceable fixed expenses
Product line segment margin (loss)
Required 3
Net operating income (loss)
Totals
< Required 2
Dirt Bikes Mountain Bikes Racing Bikes
Required 3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa1fb77d1-c752-4653-8f65-d5ebd4ec27ec%2Fedeb9a51-3bde-4c9f-adea-2a1c76325afd%2F8hwe9ag_processed.png&w=3840&q=75)
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare a properly formatted segmented income statement that would be more useful to management in assessing the lo
profitability of the various product lines.
Contribution margin (loss)
Traceable fixed expenses:
Total traceable fixed expenses
Product line segment margin (loss)
Required 3
Net operating income (loss)
Totals
< Required 2
Dirt Bikes Mountain Bikes Racing Bikes
Required 3
![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:
Total
$ 932,000
471,000
461,000
Dirt Bikes
$ 265,000
118,000
147,000
69,700
44,000
115,700
186,400
415,800
$ 45,200
Mountain
Bikes
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)
*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.
$ 408,000
200,000
208,000
Racing Bikes
$ 259,000
153,000
106,000
9,000
40,300
20,400
20,900
8,000
15,100
40,700
38,400
36,600
53,000
81,600
51,800
123,600
168,300
123,900
$ 23,400 $ 39,700 $ (17,900)
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa1fb77d1-c752-4653-8f65-d5ebd4ec27ec%2Fedeb9a51-3bde-4c9f-adea-2a1c76325afd%2Fdjecghh_processed.png&w=3840&q=75)
Transcribed Image Text: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:
Total
$ 932,000
471,000
461,000
Dirt Bikes
$ 265,000
118,000
147,000
69,700
44,000
115,700
186,400
415,800
$ 45,200
Mountain
Bikes
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)
*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.
$ 408,000
200,000
208,000
Racing Bikes
$ 259,000
153,000
106,000
9,000
40,300
20,400
20,900
8,000
15,100
40,700
38,400
36,600
53,000
81,600
51,800
123,600
168,300
123,900
$ 23,400 $ 39,700 $ (17,900)
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.
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