Kristen Lu purchased a used automobile for $7.950 at the beginning of last year and incurred the following operating costs: Depreciation (57,950 - 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $ 1,590 $ 800 $ 400 $ 210 $ 0.09 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs, Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $1.590. The car is kept in a garage for a monthly fee Required: 1 Kristen drove the car 10,000 miles last year Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places) . Average found out per mile Variable rating cost per mile Average cost per mile 5 0.00 2 Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision? Assume that there is no decrease in the resale value of the car due to its use. You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with o question mark will be automatically greded as incorrect) Verable operating costs 2 Depreciation 2 Ntomboleta 2 cente con nurce costs 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 Dirt Mountain Racing Total Bikes Bikes Bikes $ 925,000 $269,000 $ 406,000 $250,000 473,000 117,00 200,000 156,000 452,000 152.000 206,000 94,000 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) 69,500 8,400 40,800 20,300 43,700 20,400 7.300 15,500 114,700 40,200 38,300 35,700 185,000 53,800 81,200 50,000 412,900 122,000 168,600 121,500 $ 39,100 $ 29,200 $ 37,400 $(27,500) "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 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? Should the production and sale of racing bikes be discontinued? Yes ONO 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 Contribution margin (los) Traceable foxed expenses Total traceable fed expenses Product line segment margin (loss) Net operating Income (oss)
