The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales andexpenses for the past quarter follow:DirtRacingBikesMountainTotalBikesBikesSalesVarlable manufacturingand selling expenses$300,000$90,000 $150,000 $60,000120,00027,00060,00033,000.........Contribution margin..180,00063,00090,00027,000Fxed expenses:Advertising, traceableDepreciation of special equipmentSalaries of product-line managers.Allocated common fixed expensesTotal foxed expenses..Net operating income (loss) ..10,0006,00030,00023,00036,00060,00014,0009,00013,00030,0006,0008,00010,00012,00012,00018,000148,00046,00066,00036,00032,000 $17.00024,000 (0.000)"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 notthe 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-runprofitability of the various product lines.

The contribution margin can be stated on a gross or per-unit basis. It shows the additional money…

or the past quarter follow: Dirt Mountain Racing Bikes Total Bikes Bikes Sales.. Varlable manufacturing ........ $300,000 $90,000 $150,000 $60,000 and selling expenses 33,000 90,000 27,000 120,000 27,000 60,000 .......... Contribution margin 180,000 63,000 ....... Rxed expenses: Advertising, traceable Depreciation of special equipment. Salaries of product-line managers. Allocated common flxed expenses 10,000 6,000 12,000 18,000 6,000 8,000 10,000 12,000 36.000 24,000 $0.000) 14,000 30,000 23,000 36,000 60,000 9,000 13,000 30,000 Total foxed expenses. 148,000 46,000 66,000 Net operating income (loss) $32.000 $17,000 ........

or the past quarter follow: Dirt Mountain Racing Bikes Total Bikes Bikes Sales.. Varlable manufacturing ........ $300,000 $90,000 $150,000 $60,000 and selling expenses 33,000 90,000 27,000 120,000 27,000 60,000 .......... Contribution margin 180,000 63,000 ....... Rxed expenses: Advertising, traceable Depreciation of special equipment. Salaries of product-line managers. Allocated common flxed expenses 10,000 6,000 12,000 18,000 6,000 8,000 10,000 12,000 36.000 24,000 $0.000) 14,000 30,000 23,000 36,000 60,000 9,000 13,000 30,000 Total foxed expenses. 148,000 46,000 66,000 Net operating income (loss) $32.000 $17,000 ........

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2PA: A company manufactures and sells racing bicycles to specialty retailers. The Bomber model sells for...

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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 DirtBikes Mountain Bikes RacingBikes Sales $ 920,000 $ 267,000 $ 401,000 $ 252,000 Variable manufacturing and selling expenses 464,000 118,000 191,000 155,000 Contribution margin 456,000 149,000 210,000 97,000 Fixed expenses: Advertising, traceable 69,600 8,600 40,200 20,800 Depreciation of special equipment 44,300 20,900 7,800 15,600 Salaries of product-line managers 114,100 40,000 38,300 35,800 Allocated common fixed expenses* 184,000 53,400 80,200 50,400 Total fixed expenses 412,000 122,900 166,500 122,600 Net operating income (loss) $ 44,000 $ 26,100 $ 43,500 $ (25,600) *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 $ 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 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 $ 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 $ 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)…