The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a...
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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 $ 922,000 476,000 446,000 $ 261,000 113,000 148,000 Mountain Bikes $ 408,000 205,000 Racing Bikes $ 253,000 158,000 203,000 95,000 69,500 8,200 41,000 20,300 44,000 20,800 7,500 15,700 116,000 40,900 38,200 36,900 184,400 52,200 81,600 50,600 413,900 122,100 168,300 123,500 $ 32,100 $ 25,900 $ 34,700 $ (28,500) 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? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter 152,000 < Required 1 Required 2 > 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 $ 922,000 476,000 446,000 $ 261,000 113,000 148,000 Mountain Bikes $ 408,000 205,000 Racing Bikes $ 253,000 158,000 203,000 95,000 69,500 8,200 41,000 20,300 44,000 20,800 7,500 15,700 116,000 40,900 38,200 36,900 184,400 52,200 81,600 50,600 413,900 122,100 168,300 123,500 $ 32,100 $ 25,900 $ 34,700 $ (28,500) 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? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter 152,000 < Required 1 Required 2 >
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