The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a...
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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: 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. Total Dirt Bikes $ 933,000 471,000 462,000 $ 270,000 120,000 150,000 Mountain Bikes $ 408,000 Racing Bikes $ 255,000 192,000 159,000 216,000 96,000 69,600 8,500 40,900 20,200 43,500 20,700 7,700 15,100 115,000 40,400 38,800 35,800 186,600 54,000 81,600 51,000 414,700 123,600 169,000 122,100 $ 47,300 $ 26,400 $ 47,000 $ (26,100) 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: 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter < 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: 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. Total Dirt Bikes $ 933,000 471,000 462,000 $ 270,000 120,000 150,000 Mountain Bikes $ 408,000 Racing Bikes $ 255,000 192,000 159,000 216,000 96,000 69,600 8,500 40,900 20,200 43,500 20,700 7,700 15,100 115,000 40,400 38,800 35,800 186,600 54,000 81,600 51,000 414,700 123,600 169,000 122,100 $ 47,300 $ 26,400 $ 47,000 $ (26,100) 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: 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter < Required 1 Required 2 >
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Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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