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 $ 939,000 459,000 450,000 Required: 69,400 44,200 Dirt Bikes $ 270,000 111,000 159,000 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. Management is considering discontinuing the racing bikes. The special equipment used to produce racing bikes has no resale value and does not wear out 114,500 187,800 415,900 $ 64,100 Mountain Bikes $ 409,000 197,000 212,000 8,700 21,000 40,200 54,000 123,900 $ 35,100 40,400 7,600 38,700 81,800 168,500 $ 43,500 Racing Bikes $ 260,000 151,000 109,000 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? 20,300 15,600 35,600 52,000 123,500 $ (14,500) A

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 $ 939,000 459,000 450,000 Required: 69,400 44,200 Dirt Bikes $ 270,000 111,000 159,000 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. Management is considering discontinuing the racing bikes. The special equipment used to produce racing bikes has no resale value and does not wear out 114,500 187,800 415,900 $ 64,100 Mountain Bikes $ 409,000 197,000 212,000 8,700 21,000 40,200 54,000 123,900 $ 35,100 40,400 7,600 38,700 81,800 168,500 $ 43,500 Racing Bikes $ 260,000 151,000 109,000 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? 20,300 15,600 35,600 52,000 123,500 $ (14,500) A

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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