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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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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