Required 1 Required 2Required 3 Prepare a properly formatted segmented income st

Question

Required 1 Required 2Required 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 ountain Bikes Racing Bikes Totals Dirt Bikes Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses s 920,00006700 400,0000 s 253,0000 01 477,000 115,00 o 208,00 154,0000 443,000 152,000 192,000 99,000 ol 69,30 ?| 8,60?| 40,20?| 20,50 Advertising, traceable Depreciation of special equipment 44,400 20,900 | 770?| 15,800 Salaries of the product line managers114,1040,00860035,300 227,800 69,700 86,500 Total traceable fixed expenses Product line segment margin (loss) Common fixed expenses Net operating income (loss) 71,600 215,200 S 82,300 S 105,500 27,400 411,800 s (196,600) K Required 2 Required 3

Explanation / Answer

1.

Financial advantage or disadvantage of discontinuing racing bikes:

2.

No, production and sales of racing bikes should not be discontinued.

3.

Segmented income statement:

Lost contribution margin $(99,000) Fixed costs that can be avoided: Advertising , traceable $20,500 Salary of the product line manager $35,300 $55,800 Financial (disadvantage ) per quarter $(43,200)

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