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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 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
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: Total $ 939,000 459,000 480,000 Required: 69,400 44,200 114,500 187,800 415.900 $ 64,100 Dirt Bikes $ 270,000 111,000 159,000 Mountain Bikes $ 409,000 197,000 212,000 21,000 40,200 54,000 123,900 $ 35,100 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 Racing Bikes $ 260,000 151,000 109,000 40,400 20,300 7,600 15,600 38,700 35,600 81,800 52,000 168,500 123,500 $ 43,500 $ (14,500) 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?
Transcribed Image Text: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 $ 939,000 459,000 480,000 Required: 69,400 44,200 114,500 187,800 415.900 $ 64,100 Dirt Bikes $ 270,000 111,000 159,000 Mountain Bikes $ 409,000 197,000 212,000 21,000 40,200 54,000 123,900 $ 35,100 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 Racing Bikes $ 260,000 151,000 109,000 40,400 20,300 7,600 15,600 38,700 35,600 81,800 52,000 168,500 123,500 $ 43,500 $ (14,500) 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?
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