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: Mountain Racing Bikes $ 60,e00 33, еее Bikes Total $ 300,000 120,000 180, e00 Dirt 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 $ 90,000 27,000 63,000 $ 150,eeе 60,000 90,000 27,000 30,000 23,000 35,000 60,000 10,e00 6,000 12,000 18,000 46,000 14, еее 9,000 13,000 30,e00 66,000 6,000 8,e00 10, e00 12,еее 36, еее $ (9,000) 148,e00 Net operating income (loss) $ 32,000 $ 17,000 $ 24,000 "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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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)
< Required 2
Required 3 >
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Transcribed Image Text: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) < Required 2 Required 3 > < Prev 2 of 5 Next > .... .....I
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:
Mountain
Racing Bikes
$ 60,000
33,000
27,000
Total
Dirt Bikes
Bikes
Sales
$ 300,000
120,000
180,000
$ 90,000
27,000
63,000
$ 150,000
60,000
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
90,000
10,000
6,000
12,000
18,000
14,000
9,000
13,000
30,000
66,000
6,000
8,000
10,000
12,000
36,000
30,000
23,000
35,000
60,000
148,000
46,000
Net operating income (loss)
$ 32,000
$ 17,000
$ 24,000
$ (9,000)
*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.
Aloxt
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: Mountain Racing Bikes $ 60,000 33,000 27,000 Total Dirt Bikes Bikes Sales $ 300,000 120,000 180,000 $ 90,000 27,000 63,000 $ 150,000 60,000 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 90,000 10,000 6,000 12,000 18,000 14,000 9,000 13,000 30,000 66,000 6,000 8,000 10,000 12,000 36,000 30,000 23,000 35,000 60,000 148,000 46,000 Net operating income (loss) $ 32,000 $ 17,000 $ 24,000 $ (9,000) *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. Aloxt
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