The Regal Cycle Company manufactures three bicycle models: heavy duty, mountain and race. Sales and expenses data
Question:
The Regal Cycle Company manufactures three bicycle models: heavy duty, mountain and race.
Sales and expenses data for the last quarter are noted below:
(numbers are in thousands)
TOTALWorkMontana Career
Sales $ 300$ 90$ 150$ 60
Less variable manufacturing
and sales expenses 120276033
Contribution margin 180639027
Identifiable advertising 3010146
Depreciation of
special equipment 23698
Salary of line managers 35121310
Common fixed expenses 60 183012
Total Fixed Costs 148466636
Net operating
income (or loss) $ 32$ 17$ 24($ 9)
NOTE: * Distributed on sales in monetary units
The administration is concerned about the continuous losses of the race bicycles and wants a recommendation to eliminate the line or not. The special equipment with which racing bicycles are produced has no resale value or wear.
Is required:
2. Recompose the usefulness of each bicycle model using the data from the previous table in a format that is most useful for management to value the long-term profitability of the 3 product lines (HELP: only use the identifiable costs ( direct) with each model to evaluate them separately).
Expert Answer:
To evaluate the longterm profitability of each bicycle model separately well focus on identifiable costs direct costs associated with each model From ... View the full answer
