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:DirtMountainBikesRacingBikesTotalBikes$ 923, e00 $263,000 $467, e00456, e00Sales409, 090 $ 251,880197,000212,000Variable manufacturing and selling expensesContribution marginFixed expenses:Advertising, traceableDepreciation of special equipmentSalaries of product-line managersAllocated common fixed expensesTotal fixed expenses115,000148,000155,00096,00069, 30042, 700114, 600184, 600411, 200$ 44,800 $ 26, 300 $8,50020,30040, 30052,600121,70040,2007,20038,50081,800167,70020, 60015,20035,80050, 200121, 80044,300 $(25, 808)Net operating income (loss)*Allocated on the basis of sales dollars.Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or notthe line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.Required:1. What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes?2 Should the production and sale of racing bikes be discontinued?3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-runprofitability of the various product lines.Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes?Required 1Required 2 > The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales andexpenses for the past quarter follow:DirtMountainRacingBikesTotalBikesBikes$ 923, e00 $263,000 $467, e00456, 000Sales489, 000 $ 251, 000197,000212,000Variable manufacturing and selling expensesContribution marginFixed expenses:Advertising, traceableDepreciation of special equipmentSalaries of product-line managersAllocated common fixed expensesTotal fixed expenses115,000148,800155,00096,00069, 30042,700114, 600184, 600411, 200$ 44, 800 $ 26, 300 $8,50020, зее40,30052,600121,70040,2007,20038,58е81,800167,70044,300 $(25, 808)20,60015, 20035, 80050, 200121, 89eNet operating income (loss)*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 nothe line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.Requlred: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 properiy formatted segmented income statement that would be more useful to management in assessing the long-runprofitability of the various product lines.Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Should the production and sale of racing bikes be discontinued?OYesONO< Required 1Required 3 >

If out of the various product lines, one of the product lines doesn't able to generate the revenue,…

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: Dirt Bikes $ 923, e00 $263,000 $ 115,000 148,000 Mountain Bikes 409, e00 $ 251,000 197,000 212,000 Racing Bikes Total Sales Variable manufacturing and selling expenses, Contribution margin 467,000 456, 000 155,000 96,000 Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses 69, 300 42, 700 114,600 184, 600 411, 200 $ 44, 800 $ 26, 300 $ 8,5e0 20, 300 40, 300 52,600 121,700 40,200 7,200 38,500 81,800 167,700 20, 600 15, 200 35, 8e0 50, 200 121, 800 44, 300 $(25, 800) Net operating income (loss) *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 ne the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Requlred: 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? Required 1 Required 2 >

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q