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 followSalesDirt BikesMountainBikesRacing Bikes Total$90,000$150,000$70,000$310,000Variable manufacturing and selling27,00060,00040,000127,000expensesContribution Margin$63,000$ 90,000$30,000$183,000Fixed expensesAdvertising10,00014,00015,00039,000Depreciation of special equipment6,0009,0002,00017,000Salaries of product line managers12,00013,00018,00043,000Allocated common fixed expense18,00030,0004,00052,000Total fixed expenses$46,000$66,000$39,000$151,000Net operating income (loss)$17,000$24,000$ (9,000) $ 32,000Management is concerned about the continued losses shown by the racing bikes and wants arecommendation as to whether or not the line should be discontinued. The special equipmentused to produce racing bikes has no resale value and does not wear out. Should productionand sale of the racing bikes be discontinued? Explain. Show computations to support youranswer.

The objective of the question is to determine whether the production and sale of racing bikes should…

Answered: The Regal Cycle Company manufactures…

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: Dirt Racing Bikes Mountain Total Bikes Bikes Sales Varlable manufacturing and selling expenses $300,000 $90,000 $150,000 $60,000 120,000 27,000 60,000 33,000 ......... Contribution margin.. 180,000 63,000 90,000 27,000 Fxed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers. Allocated common fixed expenses Total foxed expenses.. Net operating income (loss) .. 10,000 6,000 30,000 23,000 36,000 60,000 14,000 9,000 13,000 30,000 6,000 8,000 10,000 12,000 12,000 18,000 148,000 46,000 66,000 36,000 32,000 $17.000 24,000 (0.000) "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…
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. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) $ $ $ Net operating income (loss)
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:
The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales an expenses for the past quarter follow: Mountain Bikes Racing Bikes Total Dirt Bikes $ 929,000 470,000 $ 266,000 113,000 153,000 $ 409,000 203,000 $ 254,000 154,000 100,000 Sales Variable manufacturing and selling expenses Contribution margin 459,000 206,000 ok Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses 70,000 43,700 114,500 185,800 414,000 9,000 20,400 40,500 53,200 123,100 40,800 7,800 38,700 81,800 169,100 20,200 15,500 35,300 50,800 nt 121,800 Net operating income (loss) $ 45,000 $ 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…
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A 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 Dirt Bikes Mountain Bikes Racing Bikes Sales $ 917,000 $ 262,000 $ 404,000 $ 251,000 Variable manufacturing and selling expenses 462,000 116,000 194,000 152,000 Contribution margin 455,000 146,000 210,000 99,000 Fixed expenses: Advertising, traceable 69,700 8,500 41,000 20,200 Depreciation of special equipment 44,300 20,900 7,800 15,600 Salaries of product-line managers 116,000 40,100 39,000 36,900 Allocated common fixed expenses* 183,400 52,400 80,800 50,200 Total fixed expenses 413,400 121,900 168,600 122,900 Net operating income (loss) $ 41,600 $ 24,100 $ 41,400 $ (23,900) *Allocated on the basis of sales dollars. 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: What is 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 Dirt Bikes Mountain Bikes Racing Bikes Sales $ 925,000 $ 265,000 $ 402,000 $ 258,000 Variable manufacturing and selling expenses 466,000 111,000 195,000 160,000 Contribution margin 459,000 154,000 207,000 98,000 Fixed expenses: Advertising, traceable 69,000 8,200 40,500 20,300 Depreciation of special equipment 43,200 20,100 7,700 15,400 Salaries of product-line managers 114,400 40,400 38,900 35,100 Allocated common fixed expenses* 185,000 53,000 80,400 51,600 Total fixed expenses 411,600 121,700 167,500 122,400 Net operating income (loss) $ 47,400 $ 32,300 $ 39,500 $ (24,400) *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.…
he 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 $ 922,000 $ 269,000 $ 403,000 $ 250,000 Variable manufacturing and selling expenses 477,000 110,000 209,000 158,000 Contribution margin 445,000 159,000 194,000 92,000 Fixed expenses: Advertising, traceable 69,800 9,000 40,400 20,400 Depreciation of special equipment 43,400 20,500 7,500 15,400 Salaries of product-line managers 115,800 40,700 38,400 36,700 Allocated common fixed expenses* 184,400 53,800 80,600 50,000 Total fixed expenses 413,400 124,000 166,900 122,500 Net operating income (loss) $ 31,600 $ 35,000 $ 27,100 $ (30,500) *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: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 924,000 $ 265,000 $ 409,000 $ 250,000 Variable manufacturing and selling expenses 459,000 112,000 196,000 151,000 Contribution margin 465,000 153,000 213,000 99,000 Fixed expenses: Advertising, traceable 68,900 8,200 40,600 20,100 Depreciation of special equipment 44,200 20,800 7,400 16,000 Salaries of product-line managers 116,100 40,600 38,900 36,600 Allocated common fixed expenses* 184,800 53,000 81,800 50,000 Total fixed expenses 414,000 122,600 168,700 122,700 Net operating income (loss) $ 51,000 $ 30,400 $ 44,300 $ (23,700) *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 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 Dirt Bikes Mountain Bikes Racing Bikes Sales $ 923,000 $ 266,000 $ 405,000 $ 252,000 Variable manufacturing and selling expenses 473,000 111,000 205,000 157,000 Contribution margin 450,000 155,000 200,000 95,000 Fixed expenses: Advertising, traceable 69,200 8,400 40,600 20,200 Depreciation of special equipment 43,400 20,700 7,200 15,500 Salaries of product-line managers 114,600 40,600 38,100 35,900 Allocated common fixed expenses* 184,600 53,200 81,000 50,400 Total fixed expenses 411,800 122,900 166,900 122,000 Net operating income (loss) $ 38,200 $ 32,100 $ 33,100 $ (27,000) *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 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 Dirt Bikes Mountain Bikes Racing Bikes Sales $ 926,000 $ 269,000 $ 405,000 $ 252,000 Variable manufacturing and selling expenses 468,000 111,000 206,000 151,000 Contribution margin 458,000 158,000 199,000 101,000 Fixed expenses: Advertising, traceable 69,800 8,800 40,700 20,300 Depreciation of special equipment 43,700 20,400 7,400 15,900 Salaries of product-line managers 114,200 40,700 38,400 35,100 Allocated common fixed expenses* 185,200 53,800 81,000 50,400 Total fixed expenses 412,900 123,700 167,500 121,700 Net operating income (loss) $ 45,100 $ 34,300 $ 31,500 $ (20,700) *Allocated on the basis of sales dollars. 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:…
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