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:Total$ 917,000460,000457,000Dirt Bikes$ 264,000111,000153,000Advertising, traceableDepreciation of special equipmentSalaries of product-line managersAllocated common fixed expenses*Total fixed expensesNet 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.70,00044,400115,700183,400413,500$ 43,500Required 1< Required 18,60020,90040,60052,800122,900$ 30,100Complete this question by entering your answers in the tabs below.MountainBikes$ 402,000191,000211,00040,8007,900Required: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.Required 2 Required 3What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?Required 2 >38,70080,400167,800$ 43,200Racing Bikes$ 251,000158,00093,00020,60015,60036,40050, 200122,800$ (29,800) *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 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 1 Required 2 Required 3Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-runprofitability of the various product lines.Contribution margin (loss)Traceable fixed expenses:Total traceable fixed expensesProduct line segment margin (loss)Net operating income (loss)$Totals< Required 200Dirt Bikes Mountain Bikes Racing Bikes$000$Required 3 >00$000

Product line analysis is required when there is more than one product in a company. Segmented income…

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: Total $ 917,000 460,000 457,000 70,000 44,400 Dirt Bikes $ 264,000 111,000 153,000 115,700 183,400 413,500 $ 43,500 Mountain Bikes 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. 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. 8,600 20,900 40,600 52,800 122,900 $ 30,100 $ 402,000 191,000 211,000 40, 800 7,900 38,700 80,400 167,800 $ 43,200 Racing Bikes $ 251,000 158,000 93,000 20,600 15,600 36,400 50, 200 122,800 $ (29,800) 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-run profitability of the various product lines.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q