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 Net operating income (loss) Total $ 916,000 484,000 432,000 70,100 44,200 115,900 183,200 413,400 $ 18,600 Dirt Bikes $ 261,000 116,000 145,000 8,900 20,700 40,300 52,200 122, 100 $ 22,900 Mountain Bikes $ 405,000 210,000 195,000 Racing Bikes $ 250,000 158,000 92,000 20,200 15,800 41,000 7,700 38,700 36,900 81,000 50,000 168,400 122,900 $ 26,600 $ (30,900) *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 more useful to management in assessing the long-run profitability of the various product lines.

Should the production and sale of racing bikes be discontinued? What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? \begin{tabular}{|l|l|l|l|} \hline & Racing Bikes \\ \hline Contribution margin (loss) & & & \\ \hline Traceable foxed expenses: & & & \\ \hline & & & \\ \hline Total traceable foxed expenses & & & \\ \hline Product line segment margin (loss) & & & \\ \hline \end{tabular} Required 2 nemulrod 3 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