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helpppp please The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses
helpppp please
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: Mountain Total Dirt Bikes Bikes Sales Racing Bikes $ 924,000 $ 263,000 $ 402,000 $ 259,000 Variable manufacturing and selling expenses 472,000 115,000 203,000 154,000 Contribution margin 452,000 148,000 199,000 105,000 Fixed expenses: Advertising, traceable 69,500 8,900 40,400 20,200 Depreciation of special equipment 43,400 20,600 7,700 15,100 Salaries of product-Line managers 115,300 40,500 38,400 36,400 Allocated common fixed expenses. 184,800 52,600 80,400 51,800 Total fixed expenses 413,000 122,600 166,900 123,500 Net operating income (loss) $ 39,000 $ 25,400 $ 32, 100 $ (18,500) *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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter 50,600 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: Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 924,000 $ 263,000 $ 402,800 Variable manufacturing and selling expenses $ 259,000 472,000 115,000 203,080 154,000 Contribution margin 452,800 148,000 199,000 105,000 Fixed expenses: Advertising, traceable 69,500 8.900 40,400 20,200 Depreciation of special equipment 43,400 20,608 7,700 15,100 Salaries of product-line managers 115,300 40,500 38,400 36,408 Allocated common fixed expenses 184,800 52,600 80,400 51,800 Total fixed expenses 413,000 122,600 166,900 123,500 Net operating income (loss) $ 39,800 $ 25,400 $ 32,100 5 (18,500) "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. Answer is not complete. 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 Mountain Dirt Bikes Racing Bikes Bikes Sales $ 924.000 Variable manufacturing and selling expenses Contribution margin (loss) 924.000 0 Traceable fixed expenses Advertising, traceable Depreciation of special equipment Salaries of the product line managers Total traceable fixed expenses 0 0 Product line segment margin (loss) 924.000 $ $ 0 $ 0 Common fixed expenses 184,800 Net operating income (loss) $ 739.200 0 O OOO 0 0 0 Step by Step Solution
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