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: *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. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 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. Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $36 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relating to its own cost of producing the carburetor internally: Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 20,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $200,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 20,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 20,000 carburetors from the outside supplier? Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $200,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 20,000 carburetors from the outside supplier? Imperial Jewelers manufactures and sells a gold bracelet for $410.00. The company's accounting system says that the unit product cost for this bracelet is $264.00 as shown below: The members of a wedding party have approached Imperial Jewelers about buying 14 of these gold bracelets for the discounted pric of $370.00 each. The members of the wedding party would like special filigree applied to the bracelets that would increase the direct materials cost per bracelet by $6. Imperial Jewelers would also have to buy a special tool for $456 to apply the filigree to the bracelets. The special tool would have no other use once the special order is completed. To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $7.00 of the overhead is variable with resped to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party's order using its existing manufacturing capacity. Required: 1. What is the financial advantage (disadvantage) of accepting the special order from the wedding party? 2. Should the company accept the special order? What is the financial advantage (disadvantage) of accepting the special order from the wedding party? Enter the values for sales, variable costs, and fixed expenses in the shaded cells. Confirm that your totals match Connect. Use the Part 1 space below to show the financial advantage or (disadvantage) of the dropping the racing bikes line. Create a formula in cell F28 that automatically says yes or no. Check your answer in Connect. Ignore the third part of the question in Connect. The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: *Allocated on the basis of sales dollars. discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required Prepare Analysis in Excel for Parts 1&2 (there is a part 3 on Connect, it is not required): 1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 2. Should the production and sale of racing bikes be discontinued? Yes or No? Use a formula Part 1: Keep or Drop Contribution Margin Lost Fixed Costs Avoided Advertising, traceable Salaries of product-line managers Financial advantage (disadvantage) of dropping \begin{tabular}{ll} \hline$ & \\ \hline \hline \end{tabular} Ignore part 3 on Connect! Input the numbers from Connect in the shaded spots. Use the larger shaded spots below to create an alaysis with and without the opportunity cost. Use a formula to say whether the outside offer should be accepted in both cases. Input supplies offer gathered the following information relating to its own cost of producing the carburetor internally: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable* Input per unit numbers from Fixed manufacturing overhead, allocated Total cost *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). 0.333333 Input fraction avoidable 1. Answer below in the shaded section. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying XX,XXX carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Ltd., could use the freed capacity to launch a new product. The segment Input segment margin margin of the new product would be $XXX,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying XX,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3 , should the outside supplier's offer be accepted? No Yes or No? Answer parts 1 and 3 here using formulas: Make or Buy Cost to Make Cost to Buy Cost from Supplier DM DL VMOH FMOH traceable FMOH allocated \begin{tabular}{ll} \hline$ \\ \hline$ \end{tabular} Make or Buy Cost to Make Cost to Buy Cost from Supplier $ DM DL VMOH FMOH traceable FMOH allocated Opportunity cost - segment margin foregone $$ Advantage (Disadvantage) to Buy $ Input the data from Connect in the shaded cells. Use the shaded section below to answer Part 1. Write a formula to say whether the special order should be accepted or not. Imperial Jewelers manufactures and sells a gold bracelet for The company's accounting system says that the unit product cost for this bracelet is Direct materials Direct labor Manufacturing overhead Unit product cost The members of a wedding party have approached Imperial Jewelers about buying Insert number of for the discounted price of Insert discounted price from Connect The members of the wedding party would like special filigree applied to the bracelets that would require Imperial Jewelers to buy a special tool for Insert tool cost from Insert increase in DM from It would increase the direct materials cost per bracelet by Connect The special tool would have no other use once the special order is completed. To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much produced in any given period. However, some of the overhead is variable with respect to the number of braced Insert amount of wedding party's order using its existing manufacturing capacity. Required: 1. What is the financial advantage (disadvantage) of accepting the special order from the wedding party? 2. Should the company accept the special order? Yes or No Answer Part 1 in a schedule with formulas below: Special Order Incremental Revenue Incremental Costs DM DL VMOH Total incremental Costs Advantage (Disadvantage) of accepting \begin{tabular}{ll} \hline$ & \\ \hline \hline \end{tabular}