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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 $ 926,000 Dirt Bikes 468,000 $ 269,000 111,000 Mountain Bikes $ 405,000 206,000 Racing Bikes $ 252,000 151,000 458,000 158,000 199,000 101,000 69,800 8,800 40,700 20,300 43,700 20,400 7,400 15,900 114,200 40,700 38,400 35,100 185,200 53,800 81,000 50,400 412,900 123,700 167,500 121,700 $ 45,100 $ 34,300 $ 31,500 $ (20,700) 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter

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 $ 926,000 Dirt Bikes 468,000 $ 269,000 111,000 Mountain Bikes $ 405,000 206,000 Racing Bikes $ 252,000 151,000 458,000 158,000 199,000 101,000 69,800 8,800 40,700 20,300 43,700 20,400 7,400 15,900 114,200 40,700 38,400 35,100 185,200 53,800 81,000 50,400 412,900 123,700 167,500 121,700 $ 45,100 $ 34,300 $ 31,500 $ (20,700) 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter

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
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...
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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 $ 926,000 Dirt Bikes 468,000 $ 269,000 111,000 Mountain Bikes $ 405,000 206,000 Racing Bikes $ 252,000 151,000 458,000 158,000 199,000 101,000 69,800 8,800 40,700 20,300 43,700 20,400 7,400 15,900 114,200 40,700 38,400 35,100 185,200 53,800 81,000 50,400 412,900 123,700 167,500 121,700 $ 45,100 $ 34,300 $ 31,500 $ (20,700) 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter <Required 1 Required 2 >
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 $ 926,000 Dirt Bikes 468,000 $ 269,000 111,000 Mountain Bikes $ 405,000 206,000 Racing Bikes $ 252,000 151,000 458,000 158,000 199,000 101,000 69,800 8,800 40,700 20,300 43,700 20,400 7,400 15,900 114,200 40,700 38,400 35,100 185,200 53,800 81,000 50,400 412,900 123,700 167,500 121,700 $ 45,100 $ 34,300 $ 31,500 $ (20,700) 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter <Required 1 Required 2 >
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