question archive The Regal Cycle Company manufactures three types of bicycles a dirt bike, a mountain bike, and a racing bike
The Regal Cycle Company manufactures three types of bicycles a dirt bike, a mountain bike, and a racing bike
Subject:BusinessPrice: Bought3
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 $ 921,000 477,000 446,200 69,200 43,700 114,600 184,200 411,500 $ 32,500 Dirt Bikes Mountain Bikes Racing Bikes $ 265,000 $ 402,000 $ 254,000 117,000 287,000 153,000 148,000 195,000 101,020 8,200 40,120 20,700 20,620 7,409 15,700 40,900 38,500 35,200 53,000 80,400 50,800 122,709 166,400 122,400 $ 25,300 $ 28,600 $ (21,400) 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 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Should the production and sale of racing bikes be discontinued? Yes ONO Required 1 Required 2 Required 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 Bikes Racing Bikes 0 0 0 0 Contribution margin (loss) Traceable fixed expenses 0 0 0 Total traceable fixed expenses Product line segment margin (loss) 0 0 0 $ $ 0 $ 0 Net operating income (loss) $
