- The Regal Cycle Company Manufactures Three Types Of Bicycles A Dirt Bike A Mountain Bike And A Racing Bike Data On Sa 1 (51.47 KiB) Viewed 36 times
- The Regal Cycle Company Manufactures Three Types Of Bicycles A Dirt Bike A Mountain Bike And A Racing Bike Data On Sa 2 (34.91 KiB) Viewed 36 times
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 $ 300,000 $90,000 $ 150,000 $ 60,000 120,000 27,000 60,000 33,000 Variable manufacturing and selling expenses Contribution margin Fixed expenses: 180,000 63,000 90,000 27,000 Advertising, traceable 30,000 10,000 14,000 6,000 23,000 6,000 9,000 8,000 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses 35,000 12,000 13,000 10,000 60,000 30,000 12,000 18,000 46,000 66,000 36,000 148,000 $ 32,000 $ 17,000 $ 24,000 $ (9,000) 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 11 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?
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 Prepare a property formatted segmented income
statement that would be more useful to management in assessing the long- run profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) < Required 2