## Segmented Income Statement### InstructionComplete this question by entering your answers in the tabs below.### Tab Selection- Required 1- **Required 2**- Required 3---### TaskPrepare a properly formatted segmented income statement that would be more useful to management in assessing the long-term profitability of the various product lines.---### Segmented Income Statement Structure| | Totals | Dirt Bikes | Mountain Bikes | Racing Bikes ||--------------------------------|--------|------------|----------------|--------------|| **Contribution margin (loss)** | | | | || **Traceable fixed expenses:** | | | | || | | | | || | | | | || **Total traceable fixed expenses** | | | | || **Product line segment margin (loss)** | | | | || **Net operating income (loss)** | | | | |### Navigation- Previous- **Required 2** [Highlighted]- Next (Required 3, disabled)---This layout is designed to help management assess each product line's financial contribution, covering dirt bikes, mountain bikes, and racing bikes, as well as the overall totals. 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 is as follows:| | Total | Dirt Bikes | Mountain Bikes | Racing Bikes ||--------------------|-----------|------------|----------------|--------------|| **Sales** | $932,000 | $265,000 | $408,000 | $259,000 || **Variable manufacturing and selling expenses** | 471,000 | 118,000 | 200,000 | 153,000 || **Contribution margin** | 461,000 | 147,000 | 208,000 | 106,000 |**Fixed expenses:**- **Advertising, traceable**: - Total: $69,700 - Dirt Bikes: $9,900 - Mountain Bikes: $40,300 - Racing Bikes: $20,400- **Depreciation of special equipment**: - Total: $44,000 - Dirt Bikes: $20,000 - Mountain Bikes: $8,000 - Racing Bikes: $15,100- **Salaries of product-line managers**: - Total: $115,700 - Dirt Bikes: $40,800 - Mountain Bikes: $38,400 - Racing Bikes: $36,600- **Allocated common fixed expenses*:** - Total: $186,500 - Dirt Bikes: $46,300 - Mountain Bikes: $63,500 - Racing Bikes: $51,800| **Total fixed expenses** | $415,900 | $117,000 | $160,200 | $123,900 ||--------------------------|----------|----------|----------|----------|| **Net operating income (loss)** | $45,200 | $23,400 | $39,700 | $(17,900) |*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 discontinu

The decision of discontinuing a division is based on avoidable costs of that division and loss of…

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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