80.2K

Verified Solution

Link Copied!

The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike. and a racing bike. Data on sales expenses for the past quarter follow: Dirt Mountain Racing Total Bikes Bikes Bikes $ 929, dee $264,200 $ 406,800 $ 259, 800 467 van 112 eee 198 00 199 200 462,000 154 bee 208 epe 189, 008 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) 69,900 44 102 115 289 185 880 414 900 $ 47 128 B 300 28,7ee 40 280 52 800 122 gee . $ 32.000 42 608 21 60e 7,902 15, 480 BB see 36 708 81 200 51 808 168 ee 48.000 $(24,982) $ Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether o the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear ou 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? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-ri profitability of the various product lines. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes Required 2 > Prev 1 of 7 Next > E to search Bi aswers in the tabs be Required 1 Required 2 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes No

Answer & Explanation Solved by verified expert

See Answer