The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales andexpenses for the past quarter follow:SalesVariable manufacturing and selling expensesContribution marginFixed expenses:Advertising, traceableDepreciation of special equipmentSalaries of product-line managersAllocated common fixed expenses*Total fixed expensesNet operating income (loss)*Allocated on the basis of sales dollars.Total$ 927,000472,000455,00069,70043,800Required 1115,300185,400414, 200$ 40,800Required 2Dirt Bikes$ 270,000118,000152,000Complete this question by entering your answers in the tabs below.8,70020,70040,50054,000123,900MountainBikes$ 400,000203,000197,000Required: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?40,7007,20038,50080,000166,400$ 28,100 $ 30,600Management is considering discontinuing the racing bikes. The special equipment used to produce racing bikes has no resale valueand does not wear out.Racing Bikes$257,000151,000106,000What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?Financial (disadvantage) per quarter20,30015,90036,30051,400123,900$ (17,900)

A company sells many products as well as operates in many locations. Thus, when a particular segment…

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 $ 927,000 472,000 455,000 69,700 43,800 115,300 185,400 414, 200 $ 40,800 Dirt Bikes $ 270,000 118,000 152,000 Mountain Bikes $ 400,000 203,000 197,000 Racing Bikes $ 257,000 151,000 106,000 8,700 40,700 20,300 20,700 7,200 15,900 40,500 38,500 36,300 54,000 80,000 51,400 123,900 166,400 123,900 $ 28,100 $ 30,600 $ (17,900) 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?

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 $ 927,000 472,000 455,000 69,700 43,800 115,300 185,400 414, 200 $ 40,800 Dirt Bikes $ 270,000 118,000 152,000 Mountain Bikes $ 400,000 203,000 197,000 Racing Bikes $ 257,000 151,000 106,000 8,700 40,700 20,300 20,700 7,200 15,900 40,500 38,500 36,300 54,000 80,000 51,400 123,900 166,400 123,900 $ 28,100 $ 30,600 $ (17,900) 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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2: Cost Concepts Problem(Module 2, Ch. 2) i GALLUP ENTERPRISES Income Statement For the Month Ended August 31 Sales Less: Operating expenses: labour cost Utilities Direct labour cost. Depreciation, factory equipment Raw materials purchased Depreciation, sales equipment Insurance Rent on facilities. Selling and administrative salaries. Advertising Net loss Raw materials Work-in-process Finished goods August 1 August 31 $75,000 $129,000 50,000 80,000 $ 28,000 66,000 175,000 41,000 73,000 50,000 588,000 26,000 41,000 205,000 56,000 139,000 $1,348,400 The company's controller resigned a month ago. Hilda, a new assistant in the controller's office, prepared the income statement above. Hilda has had little experience in manufacturing operations. After seeing the $28,000 loss for August, Gallup's president stated, "I was sure we'd be profitable within six months, but our six months are up and this loss for August is even worse than July's. I think it's time to start looking for someone to buy…
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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 $ 930,000 472,000 458,000 69,000 43,300 116,000 186,000 414,300 $ 43,700 Dirt Bikes $ 265,000 115,000 150,000 8,200 20,300 40,700 53,000 122, 200 $ 27,800 Mountain Bikes $ 410,000 204,000 206,000 40,400 7,600 38,300 82,000 168,300 $ 37,700 Answer is not complete. 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? Racing Bikes $ 255,000 153,000 102,000 20,400 15,400 *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…
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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) Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Sales Variable manufacturing and selling expenses Contribution margin (loss) Total $ 922,000 459,000 463,000 Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers 69,900 43,600 114,300 184,400 412, 200 $ 50,800 *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 no 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…
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Rutland Business Services (RBS) provides miscellaneous consulting and services to local businesses. In August, RBS worked for three clients. It worked 270 hours for Selden Contracting, 170 hours for Moenhart Insurance, and 230 hours for Englewood Medical Center. RBS bills clients at $560 an hour; its labor costs are $145 an hour. A total of 750 hours were worked in August with 80 hours not billable to clients. Overhead costs of $75,000 were incurred and were assigned to clients on the basis of direct labor-hours. Because 80 hours were not billable, some overhead was not assigned to jobs. RBS had $61,000 in marketing and administrative costs. All transactions were on account. Required: a. What are the revenue and cost per client? b. Prepare an income statement for August. Complete this question by entering your answers in the tabs below. Required A Required B What are the revenue and cost per client? Revenue Labor Overhead Margin Selden Contracting Moenhart Insurance $ Englewood Medical…
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\table[[,Total,Dirt Bikes,\table[[Mountain],[Bikes]],Racing Bikes],[Sales,$921,000,$266,000,$404,000,$251,600
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