- The Regal Cycle Company Manufactures Three Types Of Bicycles A Dirt Bike A Mountain Bike And A Racing Bike Data On Sa 1 (67.95 KiB) Viewed 61 times
dirt bike, a mountain bike, and a racing bike. Data on sales and
expenses for the past quarter follow:
*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.
Exercise 13-2 (Algo) Dropping or Retaining a Segment (L013-2] 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 $ 938,00 474,000 464,880 Dirt Bikes $ 270,000 111,080 159,880 Mountain Bikes $ 410, eee 205, eee 205,00 Racing Bikes $ 258,280 158,000 100,000 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) 79,380 42,980 114,780 187,689 415, 580 $ 48, 588 9, eee 20,200 48, see 54,000 123,780 $ 35, 380 40,900 7,300 38,7ee 82,000 168,900 $ 36,100 20,400 15,400 35,500 51,600 122,90e $ (22,980) 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 he line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required: 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 >
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? Ores JONO < Required 1 Required 3 >
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 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. Totals Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable expenses Advertising, traceable Common fixed expenses 0 0 0 Total traceable fixed expenses Product line segment margin (loss) 0 s 0 S 0 S 0 Net operating income (loss) $ 0 (Required 2 Required 3