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 : Management is concered about the continued losses shown by the racing bikes and wants a recommediation as to wheter or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. 2) Recast the above data in a format that would be more usable to management in assessing the long-run profitablity of the various product lines. DirtMountainRacingTotalBikesBikesBikesSales ...$300,000$90,000 $150,000 $60,000Variable manufacturingand selling expenses120,00027,00060,00033,000Contribution margin180,00063,00090,00027,000Fixed expenses:Advertising, traceable...Depreciation of special equipment .Salaries of product-line managers.30,00010,00014,0006,00023,00035,0006,0009,0008,00012,00013,00010,000Allocated common fixed expenses".60,00018,00030,00012,000Total fixed expenses...148,00046,00066,00036.000Net operating income (loss).$ 32,000$17,000$ 24,000$ (9,000)"Allocated on the basis of sales dollars.

Segment reporting is done for finding the segmental income or loss, it does not include allocated…

Answered: Recast the above data in a format that…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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 past quarter follow :

Management is concered about the continued losses shown by the racing bikes and wants a recommediation as to wheter or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

2) Recast the above data in a format that would be more usable to management in assessing the long-run profitablity of the various product lines.

Dirt
Mountain
Racing
Total
Bikes
Bikes
Bikes
Sales ...
$300,000
$90,000 $150,000 $60,000
Variable manufacturing
and selling expenses
120,000
27,000
60,000
33,000
Contribution margin
180,000
63,000
90,000
27,000
Fixed expenses:
Advertising, traceable...
Depreciation of special equipment .
Salaries of product-line managers.
30,000
10,000
14,000
6,000
23,000
35,000
6,000
9,000
8,000
12,000
13,000
10,000
Allocated common fixed expenses".
60,000
18,000
30,000
12,000
Total fixed expenses...
148,000
46,000
66,000
36.000
Net operating income (loss).
$ 32,000
$17,000
$ 24,000
$ (9,000)
"Allocated on the basis of sales dollars.

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