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(Please answer all required parts) Income statement info for Required 3: Advertising, Common fixed expenses, Depreciation of special equipment, Salaries of product line managers, Sales, and Variable manufacturing and selling expenses

(Please answer all required parts) Income statement info for Required 3: Advertising, Common fixed expenses, Depreciation of special equipment, Salaries of product line managers, Sales, and Variable manufacturing and selling expenses

FINANCIAL ACCOUNTING
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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(Please answer all required parts)

Income statement info for Required 3: Advertising, Common fixed expenses, Depreciation of special equipment, Salaries of product line managers, Sales, and Variable manufacturing and selling expenses

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 Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)
Transcribed Image Text: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 Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)
Dirt Mountain Racing Total Bikes Bikes Bikes Sales $ 927,000 $269,000 $ 404,000 $ 254,000 Variable manufacturing and selling 472,000 111,000 201,000 160,000 expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses 455,000 158,000 203,000 94,000 70,300 43,200 115,600 185,400 414,500 $ 40,500 53,800 124,200 $ 33,800 $ 36,100 $(29,400) 8,800 20,800 40,800 40,700 7,100 38,300 80,800 166,900 20,800 15,300 36,500 50,800 123,400 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. 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?
Transcribed Image Text:Dirt Mountain Racing Total Bikes Bikes Bikes Sales $ 927,000 $269,000 $ 404,000 $ 254,000 Variable manufacturing and selling 472,000 111,000 201,000 160,000 expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses 455,000 158,000 203,000 94,000 70,300 43,200 115,600 185,400 414,500 $ 40,500 53,800 124,200 $ 33,800 $ 36,100 $(29,400) 8,800 20,800 40,800 40,700 7,100 38,300 80,800 166,900 20,800 15,300 36,500 50,800 123,400 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. 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?
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