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) *Allocated on the basis of sales dollars. Total $935,000 467,000 468,000 69,800 43,800 114,300 187,000 414,900 $53,100 Dirt Bikes. $ 269,000 115,000 154,000 8,800 20,300 40,600 53,800 123,500 $ 30,500 Mountain Bikes $ 408,000 200,000 208,000 Racing Bikes $ 258,000 152,000 106,000 40,800 20, 200 8,000 15,500 38,200 35,500 81,600 51,600 168,600 122,800 $ 39,400 $ (16,800) 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?

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) *Allocated on the basis of sales dollars. Total $935,000 467,000 468,000 69,800 43,800 114,300 187,000 414,900 $53,100 Dirt Bikes. $ 269,000 115,000 154,000 8,800 20,300 40,600 53,800 123,500 $ 30,500 Mountain Bikes $ 408,000 200,000 208,000 Racing Bikes $ 258,000 152,000 106,000 40,800 20, 200 8,000 15,500 38,200 35,500 81,600 51,600 168,600 122,800 $ 39,400 $ (16,800) 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?

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: 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. Total Dirt Bikes $ 922,000 483,000 439,000 $ 263,000 119,000 144,000 Mountain Bikes $ 406,000 208,000 Racing Bikes $ 253,000 156,000 198,000 97,000 70,100 8,900 40,400 20,800 44,200 21,000 7,300 15,900 115,500 40,900 38,300 36,300 184,400 52,600 81,200 50,600 414,200 123,400 167,200 123,600 $ 24,800 $ 20,600 $ 30,800 $ (26,600) 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…
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 DirtBikes Mountain Bikes RacingBikes Sales $ 918,000 $ 264,000 $ 403,000 $ 251,000 Variable manufacturing and selling expenses 455,000 110,000 191,000 154,000 Contribution margin 463,000 154,000 212,000 97,000 Fixed expenses: Advertising, traceable 70,600 9,000 40,900 20,700 Depreciation of special equipment 44,000 20,900 7,700 15,400 Salaries of product-line managers 116,000 40,500 38,700 36,800 Allocated common fixed expenses* 183,600 52,800 80,600 50,200 Total fixed expenses 414,200 123,200 167,900 123,100 Net operating income (loss) $ 48,800 $ 30,800 $ 44,100 $ (26,100) *Allocated on the basis of sales dollars. Management is…
Meman
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Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses: Machine rent (5,000) (20,000) (30,000) (55,000) Supervision (15,000) (10,000) (5,000) (30,000) Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $ 40,000 $ (10,000) $150,000 Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $50,000 (sales of $300,000 less total variable costs of $250,000). All variable costs are relevant. Relevant fixed costs associated with this line include 80% of parquet's machine rent and all of parquet's supervision salaries. In addition, assume that dropping the parquet product line would reduce sales of the strip line by 27%…
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 es Net operating income (loss) "Allocated on the basis of sales dollars. Total $ 924,000 469,000 Dirt Bikes 455,000 $ 266,000 116,000 150,000 Mountain Bikes $ 408,000 195,000 213,000 Racing Bikes $ 250,000 158,000 92,000 69,400 8,300 40,300 20,800 42,900 20,200 7,300 15,400 115,200 40,900 38,400 35,900 184,800 53,200 81,600 50,000 412,300 122,600 167,600 122,100 $ 42,700 $ 27,400 $ 45,400 $ (30,100) 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…
Vishano
Subject : - Accounting
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) *Allocated on the basis of sales dollars. Total $ 928,000 472,000 456,000 69,400 44,500 116, 100 185,600 415,600 $ 40,400 Required 1 Complete this question by entering your answers in the tabs below. Required 2 Dirt Bikes $ 268,000 116,000 152,000 Mountain Bikes $ 403,000 200,000 203,000 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…