2 nts eBook Hint Exercise 11-2 (Algo) Dropping or Retaining a Segment [LO11-2] 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: 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 ferences Net operating income (loss) *Allocated on the basis of sales dollars. Total $ 923,000 472,000 451,000 Dirt Bikes $ 269,000 112,000 157,000 Mountain Bikes $ 401,000 202,000 Racing Bikes $ 253,000 158,000 199,000 95,000 69,000 8,200 40,500 20,300 43,700 20,700 7,400 15,600 114,900 40,400 38,200 36,300 184,600 53,800 80,200 50,600 412,200 123,100 166,300 122,800 $ 38,800 $ 33,900 $ 32,700 $ (27,800) 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?

Exercise 11-17 (Static) Dropping or Retaining a Segment [LO11-2] Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $4,000,000 1,300,000 2,700,000 2,200,000 $ 500,000 Department Hardware $ 3,000,000 900,000 2,100,000 1,400,000 $ 700,000 Linens $ 1,000,000 400,000 600,000 800,000 $ (200,000) A study indicates that $340,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 10% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?

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Required Information Problem 18-4A (Algo) Break-even analysis, different cost structures, and income calculations LO C2, A1, P2 [The following information applies to the questions displayed below.] Henna Company produces and sells two products, Carvings and Mementos. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 42,000 units of each product. Income statements for each product follow. Sales Variable costs Contribution margin Fixed costs Income Problem 18-4A (Algo) Part 3 Contribution margin 3. Assume that the company expects sales of each product to increase to 56,000 units next year with no change in unit selling price. Prepare a contribution margin Income statement for the next year (as shown above with columns for each of the two products). (Rour "per unit" answers to 2 declmal places.) Fixed costs Sales Variable cost Carvings $ 47,600 523,320 224,280 108,280 $ 116,000 Mementos…