I would like to get assistance to solve An accounting problem. Please provide me with a valid input as given in thequestion. Thanx

CH 12 - Differential Analysis 1 of 2 http://ezto.mheducation.com/hm.tpx?_=0.08840304605601712_144809... The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total $ 918,000 478,000 Dirt Bikes $ 262,000 120,000 Contribution margin 440,000 142,000 196,000 102,000 Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 69,100 44,600 114,900 183,600 8,400 20,900 40,100 52,400 40,200 7,900 38,800 80,400 20,500 15,800 36,000 50,800 Total fixed expenses 412,200 121,800 167,300 123,100 $ 27,800 $ 20,200 $ 28,700 $ (21,100) Sales Variable manufacturing and selling expenses Net operating income (loss) Mountain Bikes $ 402,000 206,000 Racing Bikes $ 254,000 152,000 *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. Required: 1a. What is the impact on net operating income by discontinuing racing bikes? (Decreases should be indicated by a minus sign.) Current Total Contribution margin (loss) 0 Fixed expenses: Total fixed expenses Net operating income (loss) Difference: Net Operating Income Increase or (Decrease) Total If Racing Bikes Are Dropped $ 0 0 0 0 $ 0 $ 0 0 0 1b. Should production and sale of the racing bikes be discontinued? Yes No 2a. Prepare a segmented income statement. 11/21/2015 12:08 AM CH 12 - Differential Analysis 2 of 2 http://ezto.mheducation.com/hm.tpx?_=0.08840304605601712_144809... Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) 0 0 0 0 Total traceable fixed expenses 0 0 0 0 Traceable fixed expenses: Net operating income (loss) 0 $ $ 0 $ 0 $ 0 0 2b. Would a segmented income statement format be more usable to management in assessing the long-run profitability of the various product lines. Yes No rev: 05_14_2014_QC_49466, 05_16_2014_QC_49466 Hints References eBook & Resources Hint #1 Check my work 11/21/2015 12:08 AM CH 12 - Differential Analysis 1 of 2 http://ezto.mheducation.com/hm.tpx Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $35 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 15,700 Per Units Unit Per Year $ 9 $ 141,300 11 172,700 3 47,100 9* 141,300 13 204,100 Total cost $ 45 $ 706,500 *40% supervisory salaries; 60% depreciation of special equipment (no resale value). Required: 1a. Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) Total relevant cost (15,700 units) Make Buy 1b. Should the outside supplier's offer be accepted? Reject Accept 2a. Suppose that if the carburetors were purchased, Troy Engines, Ltd., could use the freed capacity to launch a new product. The segment margin of the new product would be $149,880 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) Total relevant cost (15,700 units) Make Buy 2b. Should Troy Engines, Ltd., accept the offer to buy the carburetors for $35 per unit? Reject Accept 11/21/2015 12:08 AM CH 12 - Differential Analysis 2 of 2 Hints http://ezto.mheducation.com/hm.tpx References eBook & Resources Hint #1 Check my work 11/21/2015 12:08 AM CH 12 - Differential Analysis 1 of 2 http://ezto.mheducation.com/hm.tpx Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $99,000 per quarter. The company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product A B C Quarterly Output 11,000 pounds 16,000 pounds 7,000 gallons Selling Price $ 5 per pound $ 6 per pound $ 9 per gallon Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Product A B C Additional Processing Costs $ 37,000 $ 37,000 $ 10,000 Selling Price $ 7 per pound $ 10 per pound $ 11 per gallon Required: a. Compute the incremental profit (loss) for each product. Product A Selling price after further processing Selling price at the split-off point Product B Product C Incremental revenue per pound or gallon 0 0 0 Total incremental revenue 0 0 0 0 $ 0 $ 0 Total quarterly output in pounds or gallons Total incremental processing costs Total incremental profit or loss $ b. Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) Product A Product B Product C c. Which product or products should be processed further? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) Product A Product B 11/21/2015 12:09 AM CH 12 - Differential Analysis 2 of 2 http://ezto.mheducation.com/hm.tpx Product C rev: 07_08_2014_QC_51029, 11_12_2014_QC_56986, 58664 Hints References eBook & Resources Hint #1 Check my work 11/21/2015 12:09 AM CH 12 - Differential Analysis 1 of 2 http://ezto.mheducation.com/hm.tpx Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, consideration is being given to dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: Ticket revenue (115 seats 40% occupancy $65 ticket price) Variable expenses ($12.00 per person) $ 2,990 552 100% 18.5 2,438 81.5% Contribution margin Flight expenses: Salaries, flight crew Flight promotion Depreciation of aircraft Fuel for aircraft Liability insurance Salaries, flight assistants Baggage loading and flight preparation Overnight costs for flight crew and assistants at destination Total flight expenses Net operating loss $ 360 690 390 180 180 700 170 60 2,730 $ (292) The following additional information is available about flight 482: a. Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of round trips they complete. b. One-third of the liability insurance is a special charge assessed against flight 482 because in the opinion of the insurance company, the destination of the flight is in a "high-risk" area. The remaining two-thirds would be unaffected by a decision to drop flight 482. c. The baggage loading and flight preparation expense is an allocation of ground crews' salaries and depreciation of ground equipment. Dropping flight 482 would have no effect on the company's total baggage loading and flight preparation expenses. d. If flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight. e. Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible. f. Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its payroll. Required: 1. Prepare an analysis showing what impact dropping flight 482 would have on the airline's profits. (Loss amounts should be indicated by a minus sign.) 11/21/2015 12:09 AM CH 12 - Differential Analysis 2 of 2 http://ezto.mheducation.com/hm.tpx Contribution margin lost if the tour is discontinued Less flight costs that can be avoided if the flight is discontinued: Flight promotion Fuel for aircraft Liability insurance Salaries, flight assistants Overnight costs for flight crew and assistants Net increase (decrease) in profits if the flight is discontinued References Expanded table eBook & Resources Difficulty: 1 Easy Learning Objective: 12-02 Prepare an analysis showing whether a product line or other business segment should be added or dropped. Check my work 11/21/2015 12:09 AM CH 12 - Differential Analysis 1 of 3 http://ezto.mheducation.com/hm.tpx Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: Sales Cost of goods sold Superior Markets, Inc. Income Statement For the Quarter Ended September 30 North Total Store $3,300,000 $ 760,000 1,815,000 433,000 Gross margin Selling and administrative expenses: Selling expenses: Administrative expenses Total expenses Net operating income (loss) South Store $1,320,000 711,000 East Store $1,220,000 671,000 1,485,000 327,000 609,000 549,000 823,000 398,000 234,400 109,000 316,500 155,400 272,100 133,600 1,221,000 343,400 471,900 405,700 $ 264,000 $ (16,400) $ 137,100 $ 143,300 The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is available for your use: a. The breakdown of the selling and administrative expenses is as follows: Total North Store South Store East Store $ 227,200 182,000 49,500 315,000 17,500 21,900 9,900 $ 65,500 54,000 11,400 88,000 4,900 7,300 3,300 $ 81,800 75,000 19,800 123,000 6,300 7,300 3,300 $ 79,900 53,000 18,300 104,000 6,300 7,300 3,300 $ 823,000 $ 234,400 $ 316,500 $ 272,100 Administrative expenses: Store management salaries General office salaries* Insurance on fixtures and inventory Utilities Employment taxes General office other* Total North Store South Store East Store $ 74,500 49,500 28,000 107,535 55,965 82,500 $ 22,500 11,400 8,400 31,695 16,005 19,000 $ 31,500 19,800 10,500 39,540 21,060 33,000 $ 20,500 18,300 9,100 36,300 18,900 30,500 Total administrative expenses $ 398,000 $ 109,000 $ 155,400 $ 133,600 Selling expenses: Sales salaries Direct advertising General advertising* Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment Total selling expenses *Allocated on the basis of sales dollars. 11/21/2015 12:09 AM CH 12 - Differential Analysis 2 of 3 http://ezto.mheducation.com/hm.tpx *Allocated on the basis of sales dollars. b. The lease on the building housing the North Store can be broken with no penalty. c. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed. d. The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $10,400 per quarter. The general manager of the North Store would be retained at her normal salary of $11,400 per quarter. All other employees in the store would be discharged. e. The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This person's salary is $4,300 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete. f. The company's employment taxes are 15% of salaries. g. One-third of the insurance in the North Store is on the store's fixtures. h. The \"General office salaries\" and \"General officeother\" relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person's compensation is $5,700 per quarter. Required: 1. Prepare a schedule showing the change in revenues and expenses and the impact on the company's overall net operating income that would result if the North Store were closed. (Any losses/ reductions should be indicated by a minus sign.) Costs that can be avoided: $ 0 0 2. Based on your computations in (1) above, what recommendation would you make to the management of Superior Markets, Inc.? The North Store should be closed. The North Store should not be closed. 3. Assume that if the North Store were closed, at least one-fourth of its sales would transfer to the East Store, due to strong customer loyalty to Superior Markets. The East Store has enough capacity to handle the increased sales. You may assume that the increased sales in the East Store would yield the same gross margin as a percentage of sales as present sales in that store. a. Calculate the net advantage of closing the North Store. (Any reductions or outflows should be 11/21/2015 12:09 AM CH 12 - Differential Analysis 3 of 3 http://ezto.mheducation.com/hm.tpx indicated by a minus sign.) Gross margin lost if the North Store is closed Gross margin gained from the East Store Net operating (loss) in gross margin Less costs that can be avoided if the North Store is closed Net advantage (disadvantage) of closing the North store 0 $ 0 b. What recommendation would you make to the management of Superior Markets, Inc.? The North Store should be closed. The North Store should not be closed. rev: 09_13_2014_QC_52212, 10_16_2014_QC_52212, 10_24_2014_QC_52212 References Expanded table eBook & Resources Difficulty: 2 Medium Learning Objective: 12-02 Prepare an analysis showing whether a product line or other business segment should be added or dropped. Check my work 11/21/2015 12:09 AM