{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-08T10:21:36-04:00", "answer_date": "2024-06-08 10:21:36", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "2471606", "url": "\/study-help\/questions\/the-regal-cycle-company-manufactures-three-types-of-bicycles-a-2471606", "question_creation_date_js": "2024-06-08T10:21:36-04:00", "question_creation_date": "Jun 08, 2024 10:21 AM", "meta_title": "[Solved] The Regal Cycle Company manufactures thre | SolutionInn", "meta_description": "Answer of - The Regal Cycle Company manufactures three types of bicycles a dirt bike, a mountain bike, and a racing bike. Data on | SolutionInn", "meta_keywords": "regal,cycle,company,manufactures,three,types,bicycles,dirt,bike,mountain,racing,data", "question_title_h1": "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", "question_title": "The Regal Cycle Company manufactures three types of bicycles a dirt bike,", "question_title_for_js_snippet": "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 Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 9 2 1 , 0 0 0 $ 2 6 1 , 0 0 0 $ 4 1 0 , 0 0 0 $ 2 5 0 , 0 0 0 Variable manufacturing and selling expenses 4 8 0 , 0 0 0 1 1 6 , 0 0 0 2 0 4 , 0 0 0 1 6 0 , 0 0 0 Contribution margin 4 4 1 , 0 0 0 1 4 5 , 0 0 0 2 0 6 , 0 0 0 9 0 , 0 0 0 Fixed expenses Advertising, traceable 6 8 , 9 0 0 8 , 1 0 0 4 0 , 6 0 0 2 0 , 2 0 0 Depreciation of special equipment 4 3 , 9 0 0 2 0 , 5 0 0 7 , 7 0 0 1 5 , 7 0 0 Salaries of product line managers 1 1 5 , 9 0 0 4 0 , 8 0 0 3 8 , 3 0 0 3 6 , 8 0 0 Allocated common fixed expenses 1 8 4 , 2 0 0 5 2 , 2 0 0 8 2 , 0 0 0 5 0 , 0 0 0 Total fixed expenses 4 1 2 , 9 0 0 1 2 1 , 6 0 0 1 6 8 , 6 0 0 1 2 2 , 7 0 0 Net operating income ( loss ) $ 2 8 , 1 0 0 $ 2 3 , 4 0 0 $ 3 7 , 4 0 0 $ ( 3 2 , 7 0 0 ) 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 ", "question_description": "
The Regal Cycle Company manufactures three types of bicycles<\/span><\/mi><\/mrow><\/math>a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:<\/span> <\/div>
<\/span><\/div>
Total Dirt Bikes Mountain Bikes Racing Bikes<\/span><\/div>
Sales $ <\/span>9<\/mn>2<\/mn>1<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> $ <\/span>2<\/mn>6<\/mn>1<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> $ <\/span>4<\/mn>1<\/mn>0<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> $ <\/span>2<\/mn>5<\/mn>0<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> <\/div>
Variable manufacturing and selling expenses <\/span>4<\/mn>8<\/mn>0<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mtext>1<\/mn>1<\/mn>6<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mtext>2<\/mn>0<\/mn>4<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mtext>1<\/mn>6<\/mn>0<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> <\/div>
Contribution margin <\/span>4<\/mn>4<\/mn>1<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mtext>1<\/mn>4<\/mn>5<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mtext>2<\/mn>0<\/mn>6<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mtext>9<\/mn>0<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> <\/div>
Fixed expenses: <\/span><\/div>
Advertising, traceable <\/span>6<\/mn>8<\/mn>,<\/mo>9<\/mn>0<\/mn>0<\/mn><\/mtext>8<\/mn>,<\/mo>1<\/mn>0<\/mn>0<\/mn><\/mtext>4<\/mn>0<\/mn>,<\/mo>6<\/mn>0<\/mn>0<\/mn><\/mtext>2<\/mn>0<\/mn>,<\/mo>2<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> <\/div>
Depreciation of special equipment <\/span>4<\/mn>3<\/mn>,<\/mo>9<\/mn>0<\/mn>0<\/mn><\/mtext>2<\/mn>0<\/mn>,<\/mo>5<\/mn>0<\/mn>0<\/mn><\/mtext>7<\/mn>,<\/mo>7<\/mn>0<\/mn>0<\/mn><\/mtext>1<\/mn>5<\/mn>,<\/mo>7<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> <\/div>
Salaries of product<\/span>-<\/mo><\/mrow><\/math>line managers <\/span>1<\/mn>1<\/mn>5<\/mn>,<\/mo>9<\/mn>0<\/mn>0<\/mn><\/mtext>4<\/mn>0<\/mn>,<\/mo>8<\/mn>0<\/mn>0<\/mn><\/mtext>3<\/mn>8<\/mn>,<\/mo>3<\/mn>0<\/mn>0<\/mn><\/mtext>3<\/mn>6<\/mn>,<\/mo>8<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> <\/div>
Allocated common fixed expenses<\/span>*<\/mi><\/mtext>1<\/mn>8<\/mn>4<\/mn>,<\/mo>2<\/mn>0<\/mn>0<\/mn><\/mtext>5<\/mn>2<\/mn>,<\/mo>2<\/mn>0<\/mn>0<\/mn><\/mtext>8<\/mn>2<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mtext>5<\/mn>0<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> <\/div>
Total fixed expenses <\/span>4<\/mn>1<\/mn>2<\/mn>,<\/mo>9<\/mn>0<\/mn>0<\/mn><\/mtext>1<\/mn>2<\/mn>1<\/mn>,<\/mo>6<\/mn>0<\/mn>0<\/mn><\/mtext>1<\/mn>6<\/mn>8<\/mn>,<\/mo>6<\/mn>0<\/mn>0<\/mn><\/mtext>1<\/mn>2<\/mn>2<\/mn>,<\/mo>7<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> <\/div>
Net operating income <\/span>(<\/mi><\/mrow><\/math>loss<\/span>)<\/mi><\/mrow><\/math> $ <\/span>2<\/mn>8<\/mn>,<\/mo>1<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> $ <\/span>2<\/mn>3<\/mn>,<\/mo>4<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> $ <\/span>3<\/mn>7<\/mn>,<\/mo>4<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> $ <\/span>(<\/mi>3<\/mn>2<\/mn>,<\/mo>7<\/mn>0<\/mn>0<\/mn>)<\/mi><\/mrow><\/math> <\/div>
<\/span><\/div>
*<\/mi><\/mrow><\/math>Allocated on the basis of sales dollars.<\/span> <\/div>
<\/span><\/div>
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.<\/span><\/div>
<\/span><\/div>
Required:<\/span><\/div>
1<\/mn>.<\/mo><\/mrow><\/math> What is the financial advantage <\/span>(<\/mi><\/mrow><\/math>disadvantage<\/span>)<\/mi><\/mrow><\/math> per quarter of discontinuing the Racing Bikes?<\/span> <\/div>
2<\/mn>.<\/mo><\/mrow><\/math> Should the production and sale of racing bikes be discontinued?<\/span> <\/div>
3<\/mn>.<\/mo><\/mrow><\/math> Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long<\/span>-<\/mo><\/mrow><\/math>run profitability of the various product lines.<\/span> <\/div>
<\/div><\/span> <\/div><\/div>", "transcribed_text": "", "related_book": { "title": "Fundamentals of Cost Accounting", "isbn": "78025524, 978-0078025525", "edition": "4th edition", "authors": "William Lanen, Shannon Anderson, Michael Maher", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/269.jpg", "uri": "\/textbooks\/fundamentals-of-cost-accounting-4th-edition-269", "see_more_uri": "" }, "free_related_book": { "isbn": "0367768011", "uri": "\/textbooks\/biodesign-in-the-age-of-artificial-intelligence-deep-green-1st-edition-9780367768010", "name": "Biodesign In The Age Of Artificial Intelligence Deep Green", "edition": "1st Edition" }, "question_posted": "2024-06-08 10:21:36", "see_more_questions_link": "\/study-help\/questions\/business-marketing-2022-June-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/consider-the-situation-of-la-nacin-a-hypothetical-latin-american", "description": "Consider the situation of La Nacin, a hypothetical Latin American country. 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