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:
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:
- The Regal Cycle Company Manufactures Three Types Of Bicycles A Dirt Bike A Mountain Bike And A Racing Bike Data On S 1 (58.79 KiB) Viewed 11 times
- The Regal Cycle Company Manufactures Three Types Of Bicycles A Dirt Bike A Mountain Bike And A Racing Bike Data On S 2 (58.2 KiB) Viewed 11 times
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Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2] 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: Total $ 922,000 481,000 441,000 Sales 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 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. ONO 69,800 44,000 Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes Required 1 114,800 184,400 413,000 $ 28,000 Dirt Bikes $ 266,000 118,000 148,000 Complete this question by entering your answers in the tabs below. 8,800 20,900 40,900 53,200 123,800 Mountain Bikes $ 404,000 207,000 197,000 Racing Bikes $ 252,000 156,000 96,000 40,600 7,800 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. Required 3 > 20,400 15,300 38,100 80,800 167,300 121,900 $ 24,200 $ 29,700 $ (25,900) 35,800 50,400
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: Sales 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 Net operating income (loss) Contribution margin (loss) Traceable fixed expenses: Complete this question by entering your answers in the tabs below. Total traceable fixed expenses Product line segment margin (loss) Total $ 922,000 481,000 441,000 *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 not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Net operating income (loss) 69,800 44,000 114,800 184,400 413,000 $ 28,000 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. Required 3 Dirt Bikes $ 266,000 118,000 148,000 Totals Required 1 Required 2 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. < Required 2 Mountain Bikes $ 404,000 207,000 197,000 Racing Bikes $ 252,000 156,000 96,000 8,800 40,600 20,400 20,900 7,800 15,300 40,900 38,100 35,800 53,200 80,800 50,400 123,800 167,300 121,900 $ 24,200 $ 29,700 $ (25,900) > Dirt Bikes Mountain Bikes Racing Bikes