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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: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) Total $ 929,000 472,000 457,000 70,300 43,400 114,700 185,800 414, 200 $ 42,800 Required 1 Required 2 Dirt Bikes $ 267,000 114,000 153,000 Complete this question by entering your answers in the tabs below. < Required 1 Mountain Bikes $ 407,000 205,000 202,000 *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: 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? 8,800 21,000 20,500 15,700 40,100 35,600 53,400 51,000 122,800 123,300 $ 30,200 $ 33,900 $ (21,300) 40,500 7,200 39,000 81,400 168, 100 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter Required 2 > Racing Bikes $ 255,000 153,000 102,000

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: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) Total $ 929,000 472,000 457,000 70,300 43,400 114,700 185,800 414, 200 $ 42,800 Required 1 Required 2 Dirt Bikes $ 267,000 114,000 153,000 Complete this question by entering your answers in the tabs below. < Required 1 Mountain Bikes $ 407,000 205,000 202,000 *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: 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? 8,800 21,000 20,500 15,700 40,100 35,600 53,400 51,000 122,800 123,300 $ 30,200 $ 33,900 $ (21,300) 40,500 7,200 39,000 81,400 168, 100 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter Required 2 > Racing Bikes $ 255,000 153,000 102,000

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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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: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses. Net operating income (loss) Total $ 929,000 472,000 457,000 70,300 43,400 114,700 185,800 414, 200 $ 42,800 Required 1 Required 2 Dirt Bikes $ 267,000 Mountain Bikes $ 407,000 114,000 205,000 153,000 202,000 Complete this question by entering your answers in the tabs below. < Required 1 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? 8,800 20,500 40,100 53,400 122,800 $ 30,200 $ 33,900 40,500 7,200 39,000 81,400 168, 100 *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. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter Required 2 > Racing Bikes $ 255,000 153,000 102,000 21,000 15,700 35,600 51,000 123,300 $ (21,300)
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: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses. Net operating income (loss) Total $ 929,000 472,000 457,000 70,300 43,400 114,700 185,800 414, 200 $ 42,800 Required 1 Required 2 Dirt Bikes $ 267,000 Mountain Bikes $ 407,000 114,000 205,000 153,000 202,000 Complete this question by entering your answers in the tabs below. < Required 1 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? 8,800 20,500 40,100 53,400 122,800 $ 30,200 $ 33,900 40,500 7,200 39,000 81,400 168, 100 *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. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter Required 2 > Racing Bikes $ 255,000 153,000 102,000 21,000 15,700 35,600 51,000 123,300 $ (21,300)
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