cin Bikes Bikes 923,000 $265,000 $401,000 257,000 462,000 111,000 201,000 150,00

Question

cin Bikes Bikes 923,000 $265,000 $401,000 257,000 462,000 111,000 201,000 150,000 461,000 154,000 200,000 107,000 Variable manufacturing and selling expensers Contribution margin Fixed e Advertising, traceable Depreciation of special equipment 69,9008,700 40,500 20,700 7,900 16,000 116,300 40,600 38,900 36,800 184,600 53,000 80,200 51,400 44,600 20,700 Allocated common fixed expenses Total fixed expenses Net operating income (loss) 415,400 123,000 167,500 14,900 $ 45,60o 31,000 32,500 $ (17,900 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 profitability of the various product lines. more useful to management in assessing the long-run Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 management in assessing the long- Prepare a properly formatted segmented income statement that would be more useful to mana

Explanation / Answer

total if Difference racing bike Current are 1-a) total dropped Sales 923,000 666000 -257,000 Variable expenses 462,000 312000 150,000 contribution margin (loss) 461,000 354000 -107,000 fixed expenses Advertising,traceable 69,900 49200 20,700 Depreciation on special equipment 44,600 44,600 0 Salaries of product managers 116,300 79500 36,800 common allocated costs 184,600 184,600 0 total fixed expenses 415,400 357900 57,500 Net operating income(loss) 45,600 -3900 -49,500 Net financial disadvantage ($49,500) 2) No 3) Segmented Income statement Dirt mountain Racing total bikes bikes bikes sales 923,000 265,000 401,000 257,000 variable manufacturing and selling expense 462,000 111,000 201,000 150,000 contribution margin (loss) 461,000 154,000 200,000 107,000 traceable fixed expenses advertising 69,900 8,700 40,500 20,700 depreciation on special equipment 44,600 20,700 7,900 16,000 salaries of the product line managers 116,300 40,600 38,900 36,800 total traceable fixed expenses 230,800 70,000 87,300 73,500 product line segment margin 230,200 84,000 112,700 33,500 common fixed expenses 184,600 net operating income(loss) 45,600

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