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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 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: 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) Total Dirt Mountain Racing Bikes Bikes Bikes $916,000 $261,000 $401,000 $254,000 471,000 113,000 200,000 158,000 445,000 148,000 201,000 96,000 68,700 8,200 40,200 20,300 42,900 20,300 7,100 15,500 115,400 40,800 38,300 36,300 183,200 52,200 80,200 50,800 410,200 121,500 165,800 122,900 $ 34,800 $ 26,500 $ 35,200 $(26,900) * The special equipment used to produce racing bikes has no resale value and does not wear out. Allocated on the basis of sales dollars. ** 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 1 Required 2 >
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