Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment...

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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 $ 923,000 Dirt Bikes Mountain Bikes $ 407,000 Racing Bikes $ 253,000 152,000 474,000 449,000 $ 263,000 114,000 149,000 208,000 199,000 101,000 70,200 8,500 40,900 20,800 43,600 21,000 7,200 15,400 114,800 40,200 38,500 36,100 184,600 52,600 81,400 50,600 413,200 122,300 168,000 122,900 $ 35,800 $ 26,700 $ 31,000 $ (21,900) 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? ces 2. Should the production and sale of racing bikes be discontinued? 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 $ 923,000 Dirt Bikes Mountain Bikes $ 407,000 Racing Bikes $ 253,000 152,000 474,000 449,000 $ 263,000 114,000 149,000 208,000 199,000 101,000 70,200 8,500 40,900 20,800 43,600 21,000 7,200 15,400 114,800 40,200 38,500 36,100 184,600 52,600 81,400 50,600 413,200 122,300 168,000 122,900 $ 35,800 $ 26,700 $ 31,000 $ (21,900) 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? ces 2. Should the production and sale of racing bikes be discontinued?

Answer rating: 100% (QA)

To determine the financial advantage or disadvantage of discontinuing the Racing Bikes we need to ca... View the full answer