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.TotalsDirt BikesMountain BikesRacing BikesContribution margin (loss)Traceable fixed expenses:Total traceable fixed expensesProduct line segment margin (loss)$$$Net operating income (loss) The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales andexpenses for the past quarter follow:DirtMountainRacingTotalBikesBikesBikesSales$ 926,000 $270,000 $ 405,000 $ 251,000Variable manufacturing and selling466,000117,000198,000151,000expensesContribution margin460,000153,000207,000100,000Fixed expenses:Advertising, traceableDepreciation of special equipmentSalaries of product-line managersAllocated common fixed expenses*40,5007,30038,70081,00020,50015,90035,60050,200122,20069,60043,700115,000185,2008,60020,50040,70054,000Total fixed expenses413,500123,800167,500Net operating income (loss)$ 46,500 $ 29,200 $ 39,500 $ (22,200)*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 notthe line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Income statement: When all the costs and expenses are subtracted one by one from the sale, then if…

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) $

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) $

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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2) What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes?
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Net Operating Income (-) Interest Expense (-) Cost Recovery Allowance (=) _________________ (or) NOI (minus) Interest Expense (minus) Cost Recovery Allowance (equals) ___________________ Group of answer choices
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