The Regal Cycle Company manufactures three types of bicyclesa 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 bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Sales $925,000 $ 267,000 Variable manufacturing and selling expenses 475,000 Contribution margin 450,000 110,000 157,000 Mountain Bikes $ 406,000 209,000 Racing Bikes $ 252,000 156,000 197,000 96,000 Fixed expenses: Advertising, traceable 70,100 8,500 41,000 20,600 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) 43,300 20,100 7,800 15,400 115,200 40,900 38,200 36,100 185,000 53,400 81,200 50,400 413,600 122,900 168,200 122,500 $ 36,400 $ 34,100 $ 28,800 $ (26,500) *Allocated on the basis of sales dollars. S 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial advantage (disadvantage) per quarter The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Sales $925,000 $ 267,000 Variable manufacturing and selling expenses 475,000 Contribution margin 450,000 110,000 157,000 Mountain Bikes $ 406,000 209,000 Racing Bikes $ 252,000 156,000 197,000 96,000 Fixed expenses: Advertising, traceable 70,100 8,500 41,000 20,600 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) 43,300 20,100 7,800 15,400 115,200 40,900 38,200 36,100 185,000 53,400 81,200 50,400 413,600 122,900 168,200 122,500 $ 36,400 $ 34,100 $ 28,800 $ (26,500) *Allocated on the basis of sales dollars. S 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial advantage (disadvantage) per quarter
Expert 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
-
Killer Whale, Inc. has the following balance sheet statement items: total current liabilities of $637,383; net fixed and other assets of $1,839,748; total assets of $2,902,847; and long-term debt of...
-
1 . Discuss the why following stakeholders are interested in the financial statements including APA referencing and referencing list executives consumer and societies trade creditors shareholders and...
-
Mark out the factor contributing to high maternal mortality rate- A. Antenatal Care B. Education C. Increase in the number of working women D. Early Marriage
-
Most people rely on implicit costs in their everyday lives. Can you give some examples? What alternatives did you have to achieve the desire outcome?
-
One of the commonly used performance measures in the Taguchi method is Where s2 is the sample variance. In general, the higher the performance measure, the better the design. This measure is called...
-
During 2013, Will gives $40,000 cash to Will, Jr. and a remainder interest in a few acres of land to his friend Suzy. The remainder interest is valued at $32,000. Will and his wife, Helen, elect gift...
-
What is the value of a levered company when there is a strong likelihood that it will file for bankruptcy?
-
Discuss ways that employers might seek to restrain the salary budget.
-
Construct a list of steps for making a cash withdrawal from an automated teller machine (ATM). Assume that the process begins at t TM with your bank card in hand. Assume that the ATM asks for PIN...
-
Find the x and y coordinates of all inflection points. f(x)=x+27x What is/are the inflection point(s)? Select the correct choice below and, if necessary, fill in the answer box to complete your...
-
Think of all the costs of running a factory. Apart from direct material and direct labour costs, what other costs are likely to be involved? List three of them and then attach to each one the main...
-
Which of the following procedures relating to the audit of accounts payable could the auditor delegate entirely to the client's employees? a. Foot the accounts payable ledger. b. Reconcile unpaid...
-
A random sample of size 20 from a normal distribution has standard deviation s = 50. Test H0 : = 45 versus H1: > 45 at the = 0.05 level. Do you reject H0?
-
Based on your reading, what are some of the organizational benefits associated with having volunteer programs? What are some of the organizational disadvantages? Do you believe the benefits outweigh...
-
Only one of the following four statements, which compare confirmation of accounts payable with suppliers and confirmation of accounts receivable with customers, is true. The true statement is that a....
-
It seems that most all people know the Miranda rights. Is there a need to state the Miranda rights any longer in custodial interrogations? references please
-
Software Solution is family-owned business that has been in operation for more than 15 year. The board of directors is comprised of mainly family members, plus a few professionals such as an...
-
Your manager wants you to write a report detailing the internal and external benchmarks available and explaining why he should be using them in reviewing performance.
-
Identify the key priorities for a small events company which specialises in wedding planning and arrangement for each of the four dimensions of the Balanced Scorecard, identify suitable measures for...
-
Define strategic management accounting.
Study smarter with the SolutionInn App