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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 $ 928,000 472,000 456,000 69,400 44,500 116,100 185,600 415,600 $ 40,400 Required 1 Required 2 Dirt Bikes $ 268,000 116,000 152,000 Complete this question by entering your answers in the tabs below. 8,500 20,600 41,000 53,600 123,700 $ 28,300 Mountain Bikes $ 403,000 200,000 203,000 40,400 8,000 38,300 80,600 167,300 $ 35,700 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? 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 Racing Bikes $ 257,000 156,000 101,000 20,500 15,900 36,800 51,400 124,600 $ (23,600)

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 Required 2 Dirt Bikes $ 268,000 116,000 152,000 Complete this question by entering your answers in the tabs below. 8,500 20,600 41,000 53,600 123,700 $ 28,300 Mountain Bikes $ 403,000 200,000 203,000 40,400 8,000 38,300 80,600 167,300 $ 35,700 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? 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 Racing Bikes $ 257,000 156,000 101,000 20,500 15,900 36,800 51,400 124,600 $ (23,600)

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) *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 and sale of racing bikes be discontinued? 40,400 8,000 38,300 80,600 167,300 8,500 20,500 20,600 15,900 41,000 36,800 53,600 51,400 123,700 124,600 $ 28,300 $ 35,700 $ (23,600) Racing Bikes $ 257,000 156,000 101,000 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter
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) *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 and sale of racing bikes be discontinued? 40,400 8,000 38,300 80,600 167,300 8,500 20,500 20,600 15,900 41,000 36,800 53,600 51,400 123,700 124,600 $ 28,300 $ 35,700 $ (23,600) Racing Bikes $ 257,000 156,000 101,000 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter
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