The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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) *Allocated on the basis of sales dollars. Total Dirt Bikes $ 925,000 463,000 $ 268,000 119,000 462,000 149,000 Mountain Bikes $ 406,000 190,000 216,000 Racing Bikes $ 251,000 154,000 97,000 70,100 8,700 40,600 20,800 43,700 20,300 7,700 15,700 114,300 40,600 38,700 35,000 185,000 53,600 81,200 50,200 413,100 123,200 168,200 121,700 $ 48,900 $ 25,800 $ 47,800 $ (24,700) Management is considering discontinuing the racing bikes. 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? 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) *Allocated on the basis of sales dollars. Total Dirt Bikes $ 925,000 463,000 $ 268,000 119,000 462,000 149,000 Mountain Bikes $ 406,000 190,000 216,000 Racing Bikes $ 251,000 154,000 97,000 70,100 8,700 40,600 20,800 43,700 20,300 7,700 15,700 114,300 40,600 38,700 35,000 185,000 53,600 81,200 50,200 413,100 123,200 168,200 121,700 $ 48,900 $ 25,800 $ 47,800 $ (24,700) Management is considering discontinuing the racing bikes. 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?
Expert Answer:
Answer rating: 100% (QA)
To determine the financial advantage or disadvantage of discontinuing the Racing Bikes we ... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
Students also viewed these accounting questions
-
"T" those statements that are true and an"F" those that are false 1)In a stochastic continuous inventor model, if the leadtime decreases by a factor at k, the required safety stock also decreases by...
-
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: Total Dirt Bikes Mountain Bikes...
-
Timothe is single with no children. He is 40 years old and plans to retire when he reaches 65 in 25 years. Timothe estimates that he will live to be 95 years old based on his family history. Timothe...
-
Bob drives off in Freds car mistakenly believing that it is his. Is this theft? Explain.
-
What are effectiveness and efficiency, and how are they related to OB?
-
Consider again the RLC circuit of Problem P3.1 when R = 2.5, L = 1/4, and C = 1/6. (a) Determine whether the system is stable by finding the characteristic equation with the aid of the A matrix. (b)...
-
The traditional income statement for Reeves Company shows sales \($900,000\), cost of goods sold \($600,000\), and operating expenses \($200,000\). Assum- ing all costs and expenses are 70% variable...
-
Charles Byrd was in a minimum- security jail awaiting trial. A team of sheriffs deputies took several inmates into a room for a strip search without any apparent justification. Byrd was ordered to...
-
Sage Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company's bikes....
-
As of June 1, 2016, the Cooper company had a balance of accounts receivable of 14,000. During the month, the company performed credit services for 35,000 and collected accounts receivable for 23,000....
-
The selected watch item that I have decided to cover was the "A Helpful Receptionist" video. A man walks into the office and asks the receptionist if it was the correct office for the Metropolitan...
-
Gabriel needs to know how much he would be receiving from the bank in 10 years if he starts saving 1345 monthly, with an annual interest rate of 3.5%, how much would Gabriel have?
-
1. a. Use Simpson's rule to approximate for e-2x dx with n = 4 b. This approximation is within how much of the actual value of the integral?
-
How can applied ethics be used to address contemporary ethical issues such as bioethics, environmental ethics, and business ethics, and what methodologies are most effective in resolving these...
-
You are consulted by Sam and Mary Sithole in connection with their Will. They are a young married couple with two children, a son Pano of 12 years and a daughter Samantha of 8 years. Sam and Mary are...
-
A simple exponential smoothing model ( = 0.3) is used to forecast the number of movies rented at a video store each month. The actual number of video rentals in August was 3000 and the forecast...
-
Linda Lopez opened a beauty studio, Lindas Salon, on January 2, 2011. The salon also sells beauty supplies. In January 2012, Lopez realized she had never filed any tax reports for her business and...
-
What is the Euro Areas total for Groups A through C? Use the following balance of payments data for the Euro Area from the IMF to answer this problem. Assumptions (billion US$) 2000 2001 2002 2003...
-
What is the Euro Areas total for Groups A through D? Use the following balance of payments data for the Euro Area from the IMF to answer this problem. Assumptions (billion US$) 2000 2001 2002 2003...
-
Trade Deficits and J-Curve Adjustment Paths. Assume that the United Arab Emirates has the following import/ export volumes and prices. It undertakes a major devaluation of the UAE Dirham (AED) by 6%...
Study smarter with the SolutionInn App