please help The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data onsales and expenses for the past quarter follow.MountainRacing BikesTotalDirt BikesBikes$ 921, e00478, 000443,000$ 263,000116,000147,000$ 404,000209,000195,000$ 254, 000153,000101, e00SalesVariable manufacturing and selling expensesContribution marginFixed expenses:Advertising, traceableDepreciation of special equipmentSalaries of product-line managersAllocated common fixed expenses*Total fixed expenses70,0008,80040,8007,40020,40044,00020,70015,900116, 00е40,90038,60036,50050, 800123,600184, 20052,60080,800414, 200$ 28,800123,000167,600Net operating income (loss)$ 24,000$ 27,400$ (22,600)*Allocated on the basis of sales dollars.Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as towhether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale valueand 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 assessingthe long-run profitability of the various product lines.

In this question, we have to make an income statement and find out the financial advantage or…

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Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 39P

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he 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 $ 922,000 $ 269,000 $ 403,000 $ 250,000 Variable manufacturing and selling expenses 477,000 110,000 209,000 158,000 Contribution margin 445,000 159,000 194,000 92,000 Fixed expenses: Advertising, traceable 69,800 9,000 40,400 20,400 Depreciation of special equipment 43,400 20,500 7,500 15,400 Salaries of product-line managers 115,800 40,700 38,400 36,700 Allocated common fixed expenses* 184,400 53,800 80,600 50,000 Total fixed expenses 413,400 124,000 166,900 122,500 Net operating income (loss) $ 31,600 $ 35,000 $ 27,100 $ (30,500) *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 $ 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 $ 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 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 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 Dirt Bikes Mountain Bikes Racing Bikes Sales $ 929,000 $ 264,000 $ 409,000 $ 256,000 Variable manufacturing and selling expenses 463,000 113,000 191,000 159,000 Contribution margin 466,000 151,000 218,000 97,000 Fixed expenses: Advertising, traceable 68,800 8,100 40,200 20,500 Depreciation of special equipment 43,500 20,400 7,100 16,000 Salaries of product-line managers 114,400 40,700 38,200 35,500 Allocated common fixed expenses* 185,800 52,800 81,800 51,200 Total fixed expenses 412,500 122,000 167,300 123,200 Net operating income (loss) $ 53,500 $ 29,000 $ 50,700 $ (26,200) *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 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:
Your Company sells exercise bikes for $675 each. The following cost formula relates to last year's operations: Y = $147,500 + $157X. Your Company sold 475 bikes last year, what was its net income last year? a) $93,370 b) $320,625 c) $74,575 d) $246,050 e) $98,550
Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials $ 27 Direct labor 104 Variable overhead 19 Fixed overhead 44 Total $ 194 Trailblazers has offered to sell the assembly to Mobility for $166 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $40,050. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no…
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