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3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the profitability of the various product lines. Complete this question by entering your answers in the tabs below. 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 Sales $4 934,000 $ 267,000 $ 408,000 S 259,000 Variable manufacturing and selling expenses Contribution margin (loss) 934,000 267,000 408,000 259,000 Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers 35,900 Total traceable fixed expenses 35,900 Product line segment margin (loss) 934,000 $ 267,000 $ 408,000 2$ 223,100 Common fixed expenses 186,800 Net operating income (loss) 24 747,200

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the profitability of the various product lines. Complete this question by entering your answers in the tabs below. 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 Sales $4 934,000 $ 267,000 $ 408,000 S 259,000 Variable manufacturing and selling expenses Contribution margin (loss) 934,000 267,000 408,000 259,000 Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers 35,900 Total traceable fixed expenses 35,900 Product line segment margin (loss) 934,000 $ 267,000 $ 408,000 2$ 223,100 Common fixed expenses 186,800 Net operating income (loss) 24 747,200

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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: Racing Bikes $934,000 $267,000 $408,000 $ 259,000Ø Dirt Bikes Mountain Bikes Total 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 478,000 117,000 206,000 155,000 456,000 150,000 202,000 104,000 69,200 43,000 114,100 186,800 413,100 122,100 40,300 7, 200 38,200 81,600 167,300 $ 42,900 $ 27,900 $ 34,700 $(19,700) 8,600 20,100 40,000 53,400 20,300 15,700 35,900 51,800 123,700 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? Financial (disadvantage) per quarter Required 1 Required 2 >
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: Racing Bikes $934,000 $267,000 $408,000 $ 259,000Ø Dirt Bikes Mountain Bikes Total 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 478,000 117,000 206,000 155,000 456,000 150,000 202,000 104,000 69,200 43,000 114,100 186,800 413,100 122,100 40,300 7, 200 38,200 81,600 167,300 $ 42,900 $ 27,900 $ 34,700 $(19,700) 8,600 20,100 40,000 53,400 20,300 15,700 35,900 51,800 123,700 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? Financial (disadvantage) per quarter Required 1 Required 2 >
*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 whe the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not w 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 profitability of the various product lines. Complete this question by entering your answers in the tabs below. 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 Sales 934,000 $ 267,000 $ 408,000 $ 259,000 Variable manufacturing and selling expenses Contribution margin (loss) 934,000 267,000 408,000 259,000 Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers 35,900 Total traceable fixed expenses 35,900 Product line segment margin (loss) 934,000 $ 267,000 $ 408,000 $ 223,100 Common fixed expenses 186,800 Net operating income (loss) $ 747,200
Transcribed Image Text:*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 whe the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not w 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 profitability of the various product lines. Complete this question by entering your answers in the tabs below. 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 Sales 934,000 $ 267,000 $ 408,000 $ 259,000 Variable manufacturing and selling expenses Contribution margin (loss) 934,000 267,000 408,000 259,000 Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers 35,900 Total traceable fixed expenses 35,900 Product line segment margin (loss) 934,000 $ 267,000 $ 408,000 $ 223,100 Common fixed expenses 186,800 Net operating income (loss) $ 747,200
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