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htrinsReg-true&returnuri;"https%3A% cengageNow 1 0ri. O Sam's Club Identity- u- Help Save 923,000 8265,000 408,000 250,o00 478,0D0 117.000 205,000 156,000 Variable sanufacturing and selling4 44s,00 -140,000 203,000 94,000 Contribation margin Tixed expenses dvertia Depreciation of special equipment 68,700 400 40,100 20,200 43,200 20,200 ,S0 15,500 16.000 40.600 38,90036,500 Allocated common fixed expenses* Net operating ineone (loss) 32,500 $ 25,800 $ 34,900 $(28,200) Allocated on the basis of sales dolars. Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the Ine should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out Required What is the financial advantage Idisadvamtage) per quarter of discontinuing the Racing ke? Should the production and sale of racing bikes be discontinued? a. Prepare a properly formatted segmented Income statement that would be more useful to management in assessing the long-ur profsablity of the various product ines. Complete this question by entering your answers in the tabs below. Required Reqired 2 Required what is the financial advantage (dssovantage) per quarter of discontinuing the Racing Skes MacBook Air 5 8 0Explanation / Answer
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Total Dirt Bikes Mountain Bikes Racing Bikes Sales 9,23,000 2,65,000 4,08,000 2,50,000 Variable Cost 4,78,000 1,17,000 2,05,000 1,56,000 Contribution 4,45,000 1,48,000 2,03,000 94,000 Fixed Expenses Advertising Tarceable 68,700 8,400 40,100 20,200 Depreciation on Spl Eqip. 43,200 20,200 7,500 15,500 Salaries of the Product line mgrs 1,16,000 40,600 38,900 36,500 Allocated common Expenses 1,84,600 53,000 81,600 50,000 Total Fixed Expenses 4,12,500 1,22,200 1,68,100 1,22,200 Net Operating Income/( Loss) 32,500 25,800 34,900 -28,200 Total Total w/o Racing Diff Sales 9,23,000 6,73,000 -2,50,000 Variable Cost 4,78,000 3,22,000 -1,56,000 Contribution 2,57,000 3,51,000 -94,000 Fixed Expenses Advertising Tarceable 68,700 48,500 -20,200 Depreciation on Spl Eqip. 43,200 27,700 -15,500 Salaries of the Product line mgrs 1,16,000 79,500 -36,500 Allocated common Expenses 1,84,600 1,84,600 Total Fixed Expenses 4,11,600 3,40,300 -72,200 Net Operating Income/( Loss) 32,400 11,700 -21,800 Production and sales of the racing bike discontinued NO Total Dirt Bikes Mountain Bikes Racing Bikes Sales 9,23,000 2,65,000 4,08,000 2,50,000 Variable Cost 4,78,000 1,17,000 2,05,000 1,56,000 Contribution 4,45,000 1,48,000 2,03,000 94,000 Traceable Fixed Expenses Advertising Tarceable 68,700 8,400 40,100 20,200 Depreciation on Spl Eqip. 43,200 20,200 7,500 15,500 Salaries of the Product line mgrs 1,16,000 40,600 38,900 36,500 Allocated common Expenses Total Traceable Fixed Expenses 2,27,900 69,200 86,500 72,200 Segment wise profit 2,17,100 78,800 1,16,500 21,800 Non Taraceable Exp 1,84,600 Net Operating Income/( Loss) 32,500 78,800 1,16,500 21,800 Segment wise income statement more useful - YESRelated Questions
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