The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales ar expenses for the past quarter follow: Mountain Racing Bikes Dirt Bikes Bikes Total $ 929,000 47e, eae 459,e00 $ 266, e00 113, e0e 153,000 $ 409,000 203,000 206, e00 $ 254,000 154,e00 100, eee 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 9, eee 20,400 40,500 53, 200 123,1e0 40,800 7,800 38,700 81,800 169,100 20, 200 15,500 35, зее 50, 800 121,800 70, eee 43,700 114,500 185,800 414, еее $ 45,000 Net operating income (loss) $ 29,900 $ 36,900 $ (21,800) "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 not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required:

The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales ar expenses for the past quarter follow: Mountain Racing Bikes Dirt Bikes Bikes Total $ 929,000 47e, eae 459,e00 $ 266, e00 113, e0e 153,000 $ 409,000 203,000 206, e00 $ 254,000 154,e00 100, eee 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 9, eee 20,400 40,500 53, 200 123,1e0 40,800 7,800 38,700 81,800 169,100 20, 200 15,500 35, зее 50, 800 121,800 70, eee 43,700 114,500 185,800 414, еее $ 45,000 Net operating income (loss) $ 29,900 $ 36,900 $ (21,800) "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 not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required:

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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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 Dirt Bikes $ 922,000 483,000 439,000 $ 263,000 119,000 144,000 Mountain Bikes $ 406,000 208,000 Racing Bikes $ 253,000 156,000 198,000 97,000 70,100 8,900 40,400 20,800 44,200 21,000 7,300 15,900 115,500 40,900 38,300 36,300 184,400 52,600 81,200 50,600 414,200 123,400 167,200 123,600 $ 24,800 $ 20,600 $ 30,800 $ (26,600) 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…
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: Total DirtBikes Mountain Bikes RacingBikes Sales $ 918,000 $ 264,000 $ 403,000 $ 251,000 Variable manufacturing and selling expenses 455,000 110,000 191,000 154,000 Contribution margin 463,000 154,000 212,000 97,000 Fixed expenses: Advertising, traceable 70,600 9,000 40,900 20,700 Depreciation of special equipment 44,000 20,900 7,700 15,400 Salaries of product-line managers 116,000 40,500 38,700 36,800 Allocated common fixed expenses* 183,600 52,800 80,600 50,200 Total fixed expenses 414,200 123,200 167,900 123,100 Net operating income (loss) $ 48,800 $ 30,800 $ 44,100 $ (26,100) *Allocated on the basis of sales dollars. Management is…
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The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and aracing bike. Data on sales and expenses for the past quarter follow:Dirt Mountain RacingTotal Bikes Bikes BikesSales ............................................ $300,000 $90,000 $150,000 $60,000Variable manufacturingand selling expenses ................ 120,000 27,000 60,000 33,000Contribution margin ...................... 180,000 63,000 90,000 27,000Fixed expenses:Advertising, traceable ............... 30,000 10,000 14,000 6,000Depreciation of specialequipment ............................. 23,000 6,000 9,000 8,000Salaries of product-linemanagers .............................. 35,000 12,000 13,000 10,000Allocated common fixedexpenses* ............................. 60,000 18,000 30,000 12,000Total fixed expenses .................... 148,000 46,000 66,000 36,000Net operating income (loss) ......... $ 32,000 $17,000 $ 24,000 $ (9,000)*Allocated on the basis of sales dollars.Management is…
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 es Net operating income (loss) "Allocated on the basis of sales dollars. Total $ 924,000 469,000 Dirt Bikes 455,000 $ 266,000 116,000 150,000 Mountain Bikes $ 408,000 195,000 213,000 Racing Bikes $ 250,000 158,000 92,000 69,400 8,300 40,300 20,800 42,900 20,200 7,300 15,400 115,200 40,900 38,400 35,900 184,800 53,200 81,600 50,000 412,300 122,600 167,600 122,100 $ 42,700 $ 27,400 $ 45,400 $ (30,100) 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…
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 $ 928,000 472,000 456,000 69,400 44,500 116, 100 185,600 415,600 $ 40,400 Required 1 Complete this question by entering your answers in the tabs below. Required 2 Dirt Bikes $ 268,000 116,000 152,000 Mountain Bikes $ 403,000 200,000 203,000 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…
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PowerTrain Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the Mountain Monster and Desert Dragon, from a single manufacturing facility. The manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products: 1 Mountain Monster Desert Dragon 2 Sales price $5,200.00 $5,300.00 3 Variable cost of goods sold 3,240.00 3,450.00 4 Manufacturing margin $1,960.00 $1,850.00 5 Variable selling expenses 712.00 1,108.00 6 Contribution margin $1,248.00 $742.00 7 Fixed expenses 470.00 320.00 8 Income from operations $778.00 $422.00 In addition, the following sales unit volume information for the period is as follows: Mountain Monster Desert Dragon Sales unit volume 4,800 4,650 a. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each. Refer to the…
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: Total DirtBikes Mountain Bikes RacingBikes Sales $ 928,000 $ 265,000 $ 403,000 $ 260,000 Variable manufacturing and selling expenses 460,000 112,000 197,000 151,000 Contribution margin 468,000 153,000 206,000 109,000 Fixed expenses: Advertising, traceable 70,000 8,800 40,300 20,900 Depreciation of special equipment 43,600 20,800 7,600 15,200 Salaries of product-line managers 115,900 40,900 38,900 36,100 Allocated common fixed expenses* 185,600 53,000 80,600 52,000 Total fixed expenses 415,100 123,500 167,400 124,200 Net operating income (loss) $ 52,900 $ 29,500 $ 38,600 $ (15,200) *Allocated on the basis of sales dollars. Management is…
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Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials Direct labor Variable overhead Fixed overhead Total Trailblazers' offer Materials $28 110 Total costs 19 Trailblazers has offered to sell the assembly to Mobility for $164 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $35,550. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) 38…