Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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 $923,000 $263,000 $409,000 $ 251,000 Variable manufacturing and 480,000 114,000 208,000 158,000 selling expenses Contribution margin 443,000 149,000 201,000 93,000 Tixed expenses Advertising. 69,500 6,700 40,500 20,300 traceable Depreciation of speelal 43,800 20,00 7,500 15,500 equipment Salaries of product line 114,700 40,700 38,400 35,600 managers 184,60052, 600 81,800 50,200 fixed expenses Total fixed 412,600 122,800 168,200 121,600 expenses Net operating $ 30,400 $ 26,200 $ 32,800 $28,600) ncome (los) '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 Required Required What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter Reed Required 2 > Management is concerned about con 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 Required Required 2 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. Totals Dirt Bikes Mountain Racing s Bikes Bikes 0 0 0 0 Contribution margin (loss) Traceable fixed expenses Total traceable fixed expenses Product line segment margin (loss) 03 0 0 $ Net operating income (loss) S 0
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started