Required 1,2 and 3
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 $ 917,000 $265,000 $ 401,000 $ 251,000 481,000 117,000 209,000 155,000 436,000 148,000 192,000 96,000 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-1ine managern Allocated common fixed expenses Total fixed expenses Net operating income (loss) 69,900 8,300 40.800 20,800 44,200 20,600 7.700 15,900 114, 400 0,400 38,800 35,200 183,400 53,000 80,200 50,200 411,900 122,300 167,500 122,100 $ 24,100 $ 25,700 $ 24,500 $(26,100) "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 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 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: Dirt Mountain Racing Total Bikes Bikes Bikes $ 917,000 $265,000 $401,000 5.251,000 481,000 117,000 209,000 155,000 436,000 145,000 192,000 96,000 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) 69,900 3,300 40.800 20.800 44,200 20.600 7,700 15,900 114,400 46,400 38,600 35,200 183,400 53,000 80,200 50,200 411, 900 122,300 167,500 122, 100 $ 24,100 $ 25,700 $ 24,500 $426,100) "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 3 Should the production and sale of racing bikes be discontinued? 10Yes No HULU ULAR Salaries of product-line managers Allouced common fixed expenses Total fixed expenses Not operating Income (loan) 12 114,400 40,400 38.800 35,200 183,400 53,000 80,200 50,200 411, 900 122300 162.500 122, 100 $ 24,100 $ 25,700 24,500 $(26,100) "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 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 (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (los) Net operating income (oss)
