Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2] 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) *Allocated on the basis of sales dollars. Total $ 925,000 Dirt Bikes 475,000 $ 261,000 114,000 Mountain Bikes $ 405,000 209,000 Racing Bikes $ 259,000 152,000 450,000 147,000 196,000 107,000 69,300 8,700 40,300 20,300 43,200 20,200 7,400 15,600 114,900 40,100 38,300 36,500 185,000 52,200 81,000 51,800 412,400 121,200 167,000 124,200 $ 37,600 $ 25,800 $ 29,000 $ (17,200) Management is considering discontinuing the racing bikes. 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? 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 >
Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2] 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) *Allocated on the basis of sales dollars. Total $ 925,000 Dirt Bikes 475,000 $ 261,000 114,000 Mountain Bikes $ 405,000 209,000 Racing Bikes $ 259,000 152,000 450,000 147,000 196,000 107,000 69,300 8,700 40,300 20,300 43,200 20,200 7,400 15,600 114,900 40,100 38,300 36,500 185,000 52,200 81,000 51,800 412,400 121,200 167,000 124,200 $ 37,600 $ 25,800 $ 29,000 $ (17,200) Management is considering discontinuing the racing bikes. 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? 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 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Gadubhai
![Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2]
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)
*Allocated on the basis of sales dollars.
Total
$ 925,000
Dirt Bikes
475,000
$ 261,000
114,000
Mountain
Bikes
$ 405,000
209,000
Racing Bikes
$ 259,000
152,000
450,000
147,000
196,000
107,000
69,300
8,700
40,300
20,300
43,200
20,200
7,400
15,600
114,900
40,100
38,300
36,500
185,000
52,200
81,000
51,800
412,400
121,200
167,000
124,200
$ 37,600
$ 25,800 $ 29,000 $ (17,200)
Management is considering discontinuing the racing bikes. 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?
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 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3fc8b6fe-64d2-4257-b5b6-43e7fe81df06%2Fc73b13cf-181f-4400-a042-72c5bd100055%2Fex6ltsq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2]
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)
*Allocated on the basis of sales dollars.
Total
$ 925,000
Dirt Bikes
475,000
$ 261,000
114,000
Mountain
Bikes
$ 405,000
209,000
Racing Bikes
$ 259,000
152,000
450,000
147,000
196,000
107,000
69,300
8,700
40,300
20,300
43,200
20,200
7,400
15,600
114,900
40,100
38,300
36,500
185,000
52,200
81,000
51,800
412,400
121,200
167,000
124,200
$ 37,600
$ 25,800 $ 29,000 $ (17,200)
Management is considering discontinuing the racing bikes. 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?
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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