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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 $ 925,000 479,000 446,000 Required 1 70,000 44,000 115,300 185,000 414,300 $31,700 Required 2 Required 3 Dirt Bikes $268,000 116,000 152,000 8,500 21,000 41,000 53,600 124,100 $ 27,900 Complete this question by entering your answers in the tabs below. < Required 1 *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 or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Answer is not complete. 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-run profitability of the various product lines. Mountain Bikes $ 401,000 203,000 198,000 40,600 7,400 38,700 80,200 166,900 $31,100 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial advantage (disadvantage) per quarter Required 2 > Racing Bikes $ 256,000 160,000 96,000 20,900 15,600 35,600 51,200 123,300 $ (27,300)

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 $ 925,000 479,000 446,000 Required 1 70,000 44,000 115,300 185,000 414,300 $31,700 Required 2 Required 3 Dirt Bikes $268,000 116,000 152,000 8,500 21,000 41,000 53,600 124,100 $ 27,900 Complete this question by entering your answers in the tabs below. < Required 1 *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 or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Answer is not complete. 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-run profitability of the various product lines. Mountain Bikes $ 401,000 203,000 198,000 40,600 7,400 38,700 80,200 166,900 $31,100 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial advantage (disadvantage) per quarter Required 2 > Racing Bikes $ 256,000 160,000 96,000 20,900 15,600 35,600 51,200 123,300 $ (27,300)

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 45E
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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) Required 1 Required 2 Required 3 Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers 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? Complete this question by entering your answers in the tabs below. Total traceable fixed expenses Product line segment margin (loss) Common fixed expenses Net operating income (loss) Total $ 925,000 479,000 446,000 *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 or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. 33 300 70,000 44,000 115,300 185,000 414,300 $ 31,700 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines. ✓ $ X Answer is not complete. $ Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines. Dirt Bikes $ 268,000 116,000 152,000 Totals < Required 2 8,500 21,000 41,000 53,600 124,100 $ 27,900 0X $ 0x 0 0x 0x 0x 0 0 0 Dirt Bikes $ Mountain Bikes $ 401,000 203,000 198,000 0X S 0x 0 40,600 7,400 0x 0x 0x 0 0 38,700 80,200 166,900 $31,100 $ Required 3 > Mountain Bikes Racing Bikes $ 256,000 160,000 96,000 0X S 0x 0 20,900 15,600 35,600 51,200 123,300 $ (27,300) 0x 0x 0x 0 0 $ Racing Bikes 0x 0X 0 0x 0x 0x 0 0
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) Required 1 Required 2 Required 3 Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers 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? Complete this question by entering your answers in the tabs below. Total traceable fixed expenses Product line segment margin (loss) Common fixed expenses Net operating income (loss) Total $ 925,000 479,000 446,000 *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 or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. 33 300 70,000 44,000 115,300 185,000 414,300 $ 31,700 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines. ✓ $ X Answer is not complete. $ Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines. Dirt Bikes $ 268,000 116,000 152,000 Totals < Required 2 8,500 21,000 41,000 53,600 124,100 $ 27,900 0X $ 0x 0 0x 0x 0x 0 0 0 Dirt Bikes $ Mountain Bikes $ 401,000 203,000 198,000 0X S 0x 0 40,600 7,400 0x 0x 0x 0 0 38,700 80,200 166,900 $31,100 $ Required 3 > Mountain Bikes Racing Bikes $ 256,000 160,000 96,000 0X S 0x 0 20,900 15,600 35,600 51,200 123,300 $ (27,300) 0x 0x 0x 0 0 $ Racing Bikes 0x 0X 0 0x 0x 0x 0 0
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) Required 1 Total $ 925,000 479,000 446,000 Required 2 70,000 44,000 115,300 185,000 414,300 $ 31,700 Required 3 Dirt Bikes $268,000 116,000 152,000 8,500 21,000 41,000 53,600 124,100 $ 27,900 Complete this question by entering your answers in the tabs below. *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 or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. < 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? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines. > Answer is not complete. Mountain Bikes $ 401,000 203,000 198,000 40,600 7,400 38,700 80,200 166,900 $31,100 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial advantage (disadvantage) per quarter Required 2 > Racing Bikes $ 256,000 160,000 96,000 20,900 15,600 35,600 51,200 123,300 $ (27,300)
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) Required 1 Total $ 925,000 479,000 446,000 Required 2 70,000 44,000 115,300 185,000 414,300 $ 31,700 Required 3 Dirt Bikes $268,000 116,000 152,000 8,500 21,000 41,000 53,600 124,100 $ 27,900 Complete this question by entering your answers in the tabs below. *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 or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. < 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? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines. > Answer is not complete. Mountain Bikes $ 401,000 203,000 198,000 40,600 7,400 38,700 80,200 166,900 $31,100 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial advantage (disadvantage) per quarter Required 2 > Racing Bikes $ 256,000 160,000 96,000 20,900 15,600 35,600 51,200 123,300 $ (27,300)
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Step 1: Introduction:

Financial advantage is considered the company’s benefit as it assists in growing the business by trading resources. When an entity stops an activity, a financial advantage arises because the costs of that activity will be removed. 

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