The Regal Cycle Company manufactures three types of bicycles -a dirt bike, a mountain bike, and...
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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: 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 $ 921,000 477,000 444,000 69,000 43,700 114,600 184,200 411,500 $ 32,500 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? Complete this question by entering your answers in the tabs below. Should the production and sale of racing bikes be discontinued? OYes ONO Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (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. Net operating income (loss) Dirt Bikes $ 265,000 117,000 148,000 Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? $ 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 8,200 20,600 40,900 53,000 122,700 $ 25,300 Totals 0 Nountain Bikes $ 402,000 207,000 195,000 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, 0 40,100 7,400 38,500 80,400 166,400 $ 28,600 0 0$ 0 Racing Bikes $ 254,000 153,000 101,000 0 0 $ 20,700 15,700 35,200 50,800 122,400 $ (21,400) Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 $ 0 0 0 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: 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 $ 921,000 477,000 444,000 69,000 43,700 114,600 184,200 411,500 $ 32,500 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? Complete this question by entering your answers in the tabs below. Should the production and sale of racing bikes be discontinued? OYes ONO Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (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. Net operating income (loss) Dirt Bikes $ 265,000 117,000 148,000 Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? $ 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 8,200 20,600 40,900 53,000 122,700 $ 25,300 Totals 0 Nountain Bikes $ 402,000 207,000 195,000 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, 0 40,100 7,400 38,500 80,400 166,400 $ 28,600 0 0$ 0 Racing Bikes $ 254,000 153,000 101,000 0 0 $ 20,700 15,700 35,200 50,800 122,400 $ (21,400) Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 $ 0 0 0
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Related Book For
Essentials of Statistics for the Behavioral Sciences
ISBN: 978-1285056340
8th Edition
Authors: Frederick J Gravetter, Larry B. Wallnau
Posted Date:
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