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 o the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear ou Required 1 Required 2 Required 3 Total $ 922,000 459,000 463,000 Complete this question by entering your answers in the tabs below. Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers 69,900 43,600 114,300 184,400 412, 200 $ 50,800 Total traceable fixed expenses Product line segment margin (loss) Common fixed expenses Net operating income (loss) $ 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-r profitability of the various product lines. Totals 0 Dirt Bikes Bikes $ 266,000 $ 402,000 113,000 193,000 153,000 209,000 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. 0 0 0 8,800 20,300 40,800 53,200 123, 100 $ 29,900 $ Dirt Bikes 0 40,500 7,900 0 0 20,600 15,400 35,100 50,800 121,900 $ 41,800 $ (20,900) 38,400 80,400 167,200 $ Racing Bikes $ 254,000 153,000 101,000 Mountain Bikes Racing Bikes 0 0 0 $ 0 0
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 o the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear ou Required 1 Required 2 Required 3 Total $ 922,000 459,000 463,000 Complete this question by entering your answers in the tabs below. Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers 69,900 43,600 114,300 184,400 412, 200 $ 50,800 Total traceable fixed expenses Product line segment margin (loss) Common fixed expenses Net operating income (loss) $ 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-r profitability of the various product lines. Totals 0 Dirt Bikes Bikes $ 266,000 $ 402,000 113,000 193,000 153,000 209,000 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. 0 0 0 8,800 20,300 40,800 53,200 123, 100 $ 29,900 $ Dirt Bikes 0 40,500 7,900 0 0 20,600 15,400 35,100 50,800 121,900 $ 41,800 $ (20,900) 38,400 80,400 167,200 $ Racing Bikes $ 254,000 153,000 101,000 Mountain Bikes Racing Bikes 0 0 0 $ 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text: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)
Required 1 Required 2 Required 3
Complete this question by entering your answers in the tabs below.
Sales
Variable manufacturing and selling expenses
Contribution margin (loss)
Total
$ 922,000
459,000
463,000
Traceable fixed expenses:
Advertising, traceable
Depreciation of special equipment
Salaries of the product line managers
69,900
43,600
114,300
184,400
412, 200
$ 50,800
*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 no
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.
Total traceable fixed expenses
Product line segment margin (loss)
Common fixed expenses
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
0
Dirt Bikes
Bikes
$ 266,000 $ 402,000
193,000
113,000
153,000
209,000
8,800
20,300
40,800
53,200
123, 100
0
0 $
0
40,500
20,600
7,900
15,400
38,400
35, 100
80,400
50,800
167,200
121,900
$ 29,900 $ 41,800 $ (20,900)
Dirt Bikes
0
0
0
Racing Bikes
$ 254,000
153,000
101,000
Mountain Bikes
$
0
Racing Bikes
0
0 $
0
0
0
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step 1: Introduction of discontinued of a division or product:
VIEWStep 2: Financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes:
VIEWStep 3: Should the production and sale of racing bikes discontinued:
VIEWStep 4: Properly formatted segmented income statement:
VIEWSolution
VIEW
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education