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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: Dirt Bikes $ 923, e00 $263,000 $ 115,000 148,000 Mountain Bikes 409, e00 $ 251,000 197,000 212,000 Racing Bikes Total Sales Variable manufacturing and selling expenses, Contribution margin 467,000 456, 000 155,000 96,000 Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses 69, 300 42, 700 114,600 184, 600 411, 200 $ 44, 800 $ 26, 300 $ 8,5e0 20, 300 40, 300 52,600 121,700 40,200 7,200 38,500 81,800 167,700 20, 600 15, 200 35, 8e0 50, 200 121, 800 44, 300 $(25, 800) Net operating income (loss) *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 ne the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Requlred: 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? 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: Dirt Bikes $ 923, e00 $263,000 $ 115,000 148,000 Mountain Bikes 409, e00 $ 251,000 197,000 212,000 Racing Bikes Total Sales Variable manufacturing and selling expenses, Contribution margin 467,000 456, 000 155,000 96,000 Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses 69, 300 42, 700 114,600 184, 600 411, 200 $ 44, 800 $ 26, 300 $ 8,5e0 20, 300 40, 300 52,600 121,700 40,200 7,200 38,500 81,800 167,700 20, 600 15, 200 35, 8e0 50, 200 121, 800 44, 300 $(25, 800) Net operating income (loss) *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 ne the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Requlred: 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? Required 1 Required 2 >

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 1PB: Classify costs Cromwell Furniture Company manufactures sofas for distribution to several major...
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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: Dirt Mountain Bikes Racing Bikes Total Bikes $ 923, e00 $263,000 $ 467, e00 456, e00 Sales 409, 090 $ 251,880 197,000 212,000 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 115,000 148,000 155,000 96,000 69, 300 42, 700 114, 600 184, 600 411, 200 $ 44,800 $ 26, 300 $ 8,500 20,300 40, 300 52,600 121,700 40,200 7,200 38,500 81,800 167,700 20, 600 15,200 35,800 50, 200 121, 800 44,300 $(25, 808) Net operating income (loss) *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? Required 1 Required 2 >
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: Dirt Mountain Bikes Racing Bikes Total Bikes $ 923, e00 $263,000 $ 467, e00 456, e00 Sales 409, 090 $ 251,880 197,000 212,000 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 115,000 148,000 155,000 96,000 69, 300 42, 700 114, 600 184, 600 411, 200 $ 44,800 $ 26, 300 $ 8,500 20,300 40, 300 52,600 121,700 40,200 7,200 38,500 81,800 167,700 20, 600 15,200 35,800 50, 200 121, 800 44,300 $(25, 808) Net operating income (loss) *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? 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: Dirt Mountain Racing Bikes Total Bikes Bikes $ 923, e00 $263,000 $ 467, e00 456, 000 Sales 489, 000 $ 251, 000 197,000 212,000 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 115,000 148,800 155,000 96,000 69, 300 42,700 114, 600 184, 600 411, 200 $ 44, 800 $ 26, 300 $ 8,500 20, зее 40,300 52,600 121,700 40,200 7,200 38,58е 81,800 167,700 44,300 $(25, 808) 20,600 15, 200 35, 800 50, 200 121, 89e Net operating income (loss) *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 no the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Requlred: 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 properiy 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 Should the production and sale of racing bikes be discontinued? OYes ONO < Required 1 Required 3 >
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: Dirt Mountain Racing Bikes Total Bikes Bikes $ 923, e00 $263,000 $ 467, e00 456, 000 Sales 489, 000 $ 251, 000 197,000 212,000 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 115,000 148,800 155,000 96,000 69, 300 42,700 114, 600 184, 600 411, 200 $ 44, 800 $ 26, 300 $ 8,500 20, зее 40,300 52,600 121,700 40,200 7,200 38,58е 81,800 167,700 44,300 $(25, 808) 20,600 15, 200 35, 800 50, 200 121, 89e Net operating income (loss) *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 no the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Requlred: 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 properiy 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 Should the production and sale of racing bikes be discontinued? OYes ONO < Required 1 Required 3 >
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