Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2] The Regal Cycle Company manufactures three types...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2] 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: 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 $ 923,000 463,000 460,000 $ 270,000 117,000 153,000 Mountain Bikes $ 400,000 194,000 206,000 Racing Bikes $ 253,000 152,000 101,000 69,100 8,100 40,400 20,600 43,600 20,400 7,600 15,600 115,900 40,600 38,600 36,700 184,600 54,000 80,000 50,600 413,200 123,100 166,600 123,500 $ 46,800 $ 29,900 $ 39,400 $ (22,500) 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. Check my work 5 Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2] 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: 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 $ 923,000 463,000 460,000 $ 270,000 117,000 153,000 Mountain Bikes $ 400,000 194,000 206,000 Racing Bikes $ 253,000 152,000 101,000 69,100 8,100 40,400 20,600 43,600 20,400 7,600 15,600 115,900 40,600 38,600 36,700 184,600 54,000 80,000 50,600 413,200 123,100 166,600 123,500 $ 46,800 $ 29,900 $ 39,400 $ (22,500) 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. Check my work 5
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Why is it important to have a defined project scope? Why is it important to make sure there is agreement about the scope? Is there anything in the "Why Should You Use the WBS?
-
The payroll register of Gregory Communications Co. indicates $4,080 of social security withheld and $1,020 of Medicare tax withheld on total salaries of $68,000 for the period. Federal withholding...
-
The Excel file Presidents Inn Guest Database provides a list of customers, rooms they occupied, arrival and departure dates, number of occupants, and daily rate for a small bed and breakfast inn...
-
In late 2006, BusinessWeek magazine (December 18, 2006) carried a report on the aftermath of the passage of the Sarbanes-Oxley Act. According to the piece, the intentions were good, but in the two...
-
At December 31, 2012, the trial balance of Oliker Company contained the following amounts before adjustment. Instructions(a) Prepare the adjusting entry at December 31, 2012, to record bad debts...
-
Show the command to list all threads specific to a Core emulator daemon process in Linux VM? hint: first run the core emulator software, and then examine the details of the core daemon.
-
A put option contract on British pounds specifies the following information. Put option premium on British pound () = $.04 per unit. Strike price = $1.40. (right to sell at $1.40) One option contract...
-
What are the key factors that contribute to the success or failure of social movements, and how have digital technologies transformed the nature of collective action ?
-
What skills should I need to become an industrial microbiologist? What is the importance of industrial microbiology concepts if I will pursue Medicine? What tools can be used to effectively...
-
Stanley Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, and then Stanley measures the countertop area at the customer's home, cuts...
-
At time t = 0, an aircraft is located at (x, y) = (3km, -1km) in a two-dimensional coordinate system. Its velocity is v = (-30m/s, 80m/s). a) Write down an expression for the position of the aircraft...
-
Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,800 + $0.12 per machine-hour $38,900 + $1.90 per machine-hour $0.40 per machine-hour $94,200 + $2.00 per machine-hour...
-
A water reservoir initially contains 100 tone of water. Over a period of time 60 tonne of water flow into the reservoir. 20 tonne of water flow out of the reservoir and 3 tonne of water lost from the...
-
Dr. Chan obtained a $15,000 demand loan at prime plus 1.5% on September 13 from the Bank of Montreal to purchase a new dental X-ray machine. Fixed payments of $700 will be deducted from the dentists...
-
What is a common resource good?
-
What is asymmetric information?
-
Public goods, like national defense, are usually funded through government because a. no one cares about them because they are public. b. it is prohibitively difficult to withhold national defense...
Study smarter with the SolutionInn App