00 153,000 213,000
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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:
| Total | Dirt Bikes | Mountain Bikes | Racing Bikes | |
|---|---|---|---|---|
| Sales | $ 924,000 | $ 265,000 | $ 409,000 | $ 250,000 |
| Variable manufacturing and selling expenses | 459,000 | 112,000 | 196,000 | 151,000 |
| Contribution margin | 465,000 | 153,000 | 213,000 | 99,000 |
| Fixed expenses: | ||||
| Advertising, traceable | 68,900 | 8,200 | 40,600 | 20,100 |
| 44,200 | 20,800 | 7,400 | 16,000 | |
| Salaries of product-line managers | 116,100 | 40,600 | 38,900 | 36,600 |
| Allocated common fixed expenses* | 184,800 | 53,000 | 81,800 | 50,000 |
| Total fixed expenses | 414,000 | 122,600 | 168,700 | 122,700 |
| Net operating income (loss) | $ 51,000 | $ 30,400 | $ 44,300 | $ (23,700) |
*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.
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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: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 925,000 $ 265,000 $ 402,000 $ 258,000 Variable manufacturing and selling expenses 466,000 111,000 195,000 160,000 Contribution margin 459,000 154,000 207,000 98,000 Fixed expenses: Advertising, traceable 69,000 8,200 40,500 20,300 Depreciation of special equipment 43,200 20,100 7,700 15,400 Salaries of product-line managers 114,400 40,400 38,900 35,100 Allocated common fixed expenses* 185,000 53,000 80,400 51,600 Total fixed expenses 411,600 121,700 167,500 122,400 Net operating income (loss) $ 47,400 $ 32,300 $ 39,500 $ (24,400) *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 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: Total DirtBikes Mountain Bikes RacingBikes Sales $ 924,000 $ 264,000 $ 407,000 $ 253,000 Variable manufacturing and selling expenses 477,000 115,000 209,000 153,000 Contribution margin 447,000 149,000 198,000 100,000 Fixed expenses: Advertising, traceable 69,800 8,100 40,900 20,800 Depreciation of special equipment 44,100 20,700 7,800 15,600 Salaries of product-line managers 113,800 40,000 38,600 35,200 Allocated common fixed expenses* 184,800 52,800 81,400 50,600 Total fixed expenses 412,500 121,600 168,700 122,200 Net operating income (loss) $ 34,500 $ 27,400 $ 29,300 $ (22,200) *Allocated on the basis of sales dollars. Management is…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: Total DirtBikes Mountain Bikes RacingBikes Sales $ 928,000 $ 265,000 $ 403,000 $ 260,000 Variable manufacturing and selling expenses 460,000 112,000 197,000 151,000 Contribution margin 468,000 153,000 206,000 109,000 Fixed expenses: Advertising, traceable 70,000 8,800 40,300 20,900 Depreciation of special equipment 43,600 20,800 7,600 15,200 Salaries of product-line managers 115,900 40,900 38,900 36,100 Allocated common fixed expenses* 185,600 53,000 80,600 52,000 Total fixed expenses 415,100 123,500 167,400 124,200 Net operating income (loss) $ 52,900 $ 29,500 $ 38,600 $ (15,200) *Allocated on the basis of sales dollars. Management is…
- 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: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 926,000 $ 269,000 $ 405,000 $ 252,000 Variable manufacturing and selling expenses 468,000 111,000 206,000 151,000 Contribution margin 458,000 158,000 199,000 101,000 Fixed expenses: Advertising, traceable 69,800 8,800 40,700 20,300 Depreciation of special equipment 43,700 20,400 7,400 15,900 Salaries of product-line managers 114,200 40,700 38,400 35,100 Allocated common fixed expenses* 185,200 53,800 81,000 50,400 Total fixed expenses 412,900 123,700 167,500 121,700 Net operating income (loss) $ 45,100 $ 34,300 $ 31,500 $ (20,700) *Allocated on the basis of sales dollars. 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:…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: Total DirtBikes Mountain Bikes RacingBikes Sales $ 924,000 $ 268,000 $ 400,000 $ 256,000 Variable manufacturing and selling expenses 464,000 116,000 195,000 153,000 Contribution margin 460,000 152,000 205,000 103,000 Fixed expenses: Advertising, traceable 68,800 8,200 40,500 20,100 Depreciation of special equipment 43,000 20,300 7,300 15,400 Salaries of product-line managers 115,000 40,100 38,700 36,200 Allocated common fixed expenses* 184,800 53,600 80,000 51,200 Total fixed expenses 411,600 122,200 166,500 122,900 Net operating income (loss) $ 48,400 $ 29,800 $ 38,500 $ (19,900)…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: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 929,000 $ 269,000 $ 407,000 $ 253,000 Variable manufacturing and selling expenses 468,000 115,000 196,000 157,000 Contribution margin 461,000 154,000 211,000 96,000 Fixed expenses: Advertising, traceable 70,200 9,000 40,500 20,700 Depreciation of special equipment 43,500 20,500 7,300 15,700 Salaries of product-line managers 114,500 40,200 38,400 35,900 Allocated common fixed expenses* 185,800 53,800 81,400 50,600 Total fixed expenses 414,000 123,500 167,600 122,900 Net operating income (loss) $ 47,000 $ 30,500 $ 43,400 $ (26,900) *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 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: Total DirtBikes Mountain Bikes RacingBikes Sales $ 927,000 $ 266,000 $ 409,000 $ 252,000 Variable manufacturing and selling expenses 471,000 111,000 202,000 158,000 Contribution margin 456,000 155,000 207,000 94,000 Fixed expenses: Advertising, traceable 70,200 8,900 40,800 20,500 Depreciation of special equipment 44,100 20,600 8,000 15,500 Salaries of product-line managers 114,600 40,400 38,400 35,800 Allocated common fixed expenses* 185,400 53,200 81,800 50,400 Total fixed expenses 414,300 123,100 169,000 122,200 Net operating income (loss) $ 41,700 $ 31,900 $ 38,000 $ (28,200) *Allocated on the basis of sales dollars. Management is…The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and aracing bike. Data on sales and expenses for the past quarter follow:Dirt Mountain RacingTotal Bikes Bikes BikesSales ............................................ $300,000 $90,000 $150,000 $60,000Variable manufacturingand selling expenses ................ 120,000 27,000 60,000 33,000Contribution margin ...................... 180,000 63,000 90,000 27,000Fixed expenses:Advertising, traceable ............... 30,000 10,000 14,000 6,000Depreciation of specialequipment ............................. 23,000 6,000 9,000 8,000Salaries of product-linemanagers .............................. 35,000 12,000 13,000 10,000Allocated common fixedexpenses* ............................. 60,000 18,000 30,000 12,000Total fixed expenses .................... 148,000 46,000 66,000 36,000Net operating income (loss) ......... $ 32,000 $17,000 $ 24,000 $ (9,000)*Allocated on the basis of sales dollars.Management is…Shaw Company produces and sells two packaged products—Z-Bikes and y Bikes. Revenue and cost information relating to the products follow: Product Z Bikes Y Bikes Selling price per unit $ 175.00 $ 200.00 Variable expenses per unit $ 85.00 $ 105.00 Traceable fixed expenses per year $ 200,000 $ 75.00 Common fixed expenses in the company total $110 annually. Last year the company produced and sold 50,000 units of Z Bikes and 30,000 units of Y Bikes. Required: Prepare a contribution format income statement segmented by product lines.
- Company assembles bicycles and sells them at $3,500 each. Company’s costs are as follows: Direct materials $ 1,100 per unit Direct labor 300 per unit Variable MOH 120 per unit Variable selling 200 per unit Fixed MOH $ 300,000 total Fixed period costs $ 200,680 total CALCULATE the number of bicycles that the company must sell to earn $400,000 operating income. (must show calculations or no credit) Number of bicycles:_________________________Petoskey Electronics Company manufactures specialized products for boats and recreational vehicles using its newly introduced patented engine analytics device. The first-year revenues and costs for the product device are as follows: Selling price $500 per unitDirect materials $175 per unitDirect labor $45 per unitVariable manufacturing overhead $40 per unitTotal fixed manufacturing overhead $1,600,000Variable selling and administrative $30 per unitTotal fixed selling and administrative $500,000Sales and manufacturing volume 25,000 units The second year the product device was available, Petoskey Company sold only 12,000 units of its device, because a competitor, Charlevoix Supply Company, produced and sold an identical device. Petoskey Company decided to file a lawsuit against the competitor for damages (in the form of lost profits) caused by the patent infringement. REQUIRED: 2.) Assume that Charlevoix Company is liable as alleged by Petoskey Company in the…Petoskey Electronics Company manufactures specialized products for boats and recreational vehicles using its newly introduced patented engine analytics device. The first-year revenues and costs for the product device are as follows: Selling price $500 per unitDirect materials $175 per unitDirect labor $45 per unitVariable manufacturing overhead $40 per unitTotal fixed manufacturing overhead $1,600,000Variable selling and administrative $30 per unitTotal fixed selling and administrative $500,000Sales and manufacturing volume 25,000 units The second year the product device was available, Petoskey Company sold only 12,000 units of its device, because a competitor, Charlevoix Supply Company, produced and sold an identical device. Petoskey Company decided to file a lawsuit against the competitor for damages (in the form of lost profits) caused by the patent infringement. REQUIRED: 1.) Calculate Petoskey Company’s profit on this product device during the first year it…
