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: Mountain Bikes Total $ 929,000 Sales $ 404,000 201,000 Racing Bikes $ 257,000 155,000 Dirt Bikes $ 268,000 115,000 153,000 Variable manufacturing and selling expenses Contribution margini Fixed expenses: 471,000 458,000 203,000 102,000 Advertising, traceable. 69,200 8,100 40,100 21,000 43,900 20,700 8,000 15,200 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses. Total fixed expenses 114,800 40,700 38,700 35,400 185,800 53,600 80,800 51,400 413,700 123,100 167,600 123,000 Net operating income (loss) $44,300 $ 29,900 $ 35,400 $ (21,000) "Allocated on the basis of sales dollars. 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 $ (21,000) 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: Mountain Bikes Total $ 929,000 Sales $ 404,000 201,000 Racing Bikes $ 257,000 155,000 Dirt Bikes $ 268,000 115,000 153,000 Variable manufacturing and selling expenses Contribution margini Fixed expenses: 471,000 458,000 203,000 102,000 Advertising, traceable. 69,200 8,100 40,100 21,000 43,900 20,700 8,000 15,200 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses. Total fixed expenses 114,800 40,700 38,700 35,400 185,800 53,600 80,800 51,400 413,700 123,100 167,600 123,000 Net operating income (loss) $44,300 $ 29,900 $ 35,400 $ (21,000) "Allocated on the basis of sales dollars. 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 $ (21,000) Required 2 >
Expert Answer:
Answer rating: 100% (QA)
What is the financial advantage disadvantage per quarter of discontinuing the racing bikes Particula... 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
-
Review your organization's Income Statement or the Fedex 2014 Annual Report (pp. 42 - 46 and notes begin p. 47). Discuss your general insights in addition to one of the following: Option 1) Choose a...
-
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...
-
Burton Company uses the weighted-average method in its process costing system. The Packaging Department started the month with 200 units in process, started 1,500 units, and had 150 units in process...
-
Which sets of lines can be removed without stopping the code from compiling and while printing the same output? (Choose three.) A. Lines 15 and 17 B. Lines 16 and 23 C. Lines 17, 18, and 22 D. Line...
-
Chris Guthrie was recently hired by S & S Air, Inc., to assist the company with its short-term financial planning and to evaluate the companys performance. Chris graduated from college five years ago...
-
BBS College received grant of 1,05,00,000 from UGC the details of the grant provided that 75,00,000 is for the construction of three rooms, 17,50,000 for computers and internet and 12,50,000 for...
-
You are engaged in an audit of the financial statements of Pate Corporation for the year ended December 31, 1999. The financial statements and records of Pate Corporation have not been audited by...
-
Marlo Enterprises produces radon mitigation pumps. Information pertaining to the companys monthly direct labor usage is provided below: Standard labor rate per hour . . . . . . . . . . . . . . . . ....
-
The per-capita food poverty line in Guatemala was 7,596 pesos. Use this food poverty line to calculate all three versions of the Foster-Greer-Thorbeck (FGT) index. Use income per capita in pesos. ...
-
For the network of Fig. 5.158: a. Determine re. b. Find Zi, and Av o 22 V 5.6 k2 330 k =80 1.2k 0.47 k
-
You are a financial manager at ABC Corp. and are trying to assess the following project. The project will require a $250 million initial investment and will generate free cash flows in years 1-4 as...
-
Research global warming. Do you believe that it really exists? Why or why not? How do you think different countries are addressing the issue? Do you believe that the United States is doing its part...
-
For similarly charged objects, what do you think the relative position of the two objects will be when the system has reached the most stable point?
-
Identify an industrial sector in West Africa. A paper evaluating changing location considerations for that sector. Why and how have these sectors changed since the start of the industrial revolution?
-
What is the significance of Big O notation in evaluating algorithmic efficiency? Provide an example of an algorithm with exponential time complexity, and suggest ways to optimize it to improve...
-
After graduation from business school, Pete wanted to start a new business. In competition with another firm, he became involved in developing a new technology that would allow consumers to sample...
-
Pepper Company acquired 60 percent of the common stock of Safton Corporation on December 31, 20X5. On the date of acquisition, Pepper held land with a book value of $200,000 and a fair value of...
-
What are some of the possible sources of information about a company that could be used for determining the companys competitive stance?
-
Selected operating information on three different companies for a recent year is given below: Required: For each company, state whether the company would have a favorable or unfavorable volume...
-
The operations vice president of Security Home Bank has been interested in investigating the efficiency of the banks operations. She has been particularly concerned about the costs of handling...
-
Jakes Roof Repair has provided the following data concerning its costs: Cost per Fixed Cost Repair-Hour Per Month $16.30 Wages and salaries $23,200 Parts and supplies . $8.60 Equipment depreciation...
-
What is meant by liquidity and why might a supplier want to assess the liquidity position of one of their customer companies?
-
Describe the working capital cycle and calculate the length of this for a company of your choice.
-
Discuss THREE possible reasons why an entitys gross profit margin might increase from one year to the next.
Study smarter with the SolutionInn App