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 $ 924,000 487,000 437,000 $ 268,000 120,000 148,000 Mountain Bikes $ 406,000 208,000 Racing Bikes $ 250,000 159,000 198,000 91,000 69,800 8,600 40,600 20,600 43,200 20,200 7,900 15,100 115,400 40,500 38,700 36,200 184,800 53,600 81,200 50,000 413,200 122,900 168,400 121,900 $ 23,800 $ 25,100 $ 29,600 $ (30,900) 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 Dirt Bikes $ 924,000 487,000 437,000 $ 268,000 120,000 148,000 Mountain Bikes $ 406,000 208,000 Racing Bikes $ 250,000 159,000 198,000 91,000 69,800 8,600 40,600 20,600 43,200 20,200 7,900 15,100 115,400 40,500 38,700 36,200 184,800 53,600 81,200 50,000 413,200 122,900 168,400 121,900 $ 23,800 $ 25,100 $ 29,600 $ (30,900) 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?

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,...

See similar textbooks

Similar questions

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 $ 921,000 469,000 452,000 69,700 44,500 114,800 184, 200 413, 200 $ 38,800 Dirt Bikes $ 268,000 110,000 158,000 8,800 20,900 40,400 53,600 123,700 $ 34,300 Mountain Bikes $ 400,000 208,000 192,000 40,600 7,900 38,600 80,000 167,100 $ 24,900 Racing Bikes $ 253,000 151,000 102,000 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? 20, 300 15,700 35,800 50,600 122,400 $ (20,400) Management is concerned…
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 $ 927,000 472,000 455,000 69,700 43,800 Required 1 115,300 185,400 414, 200 $ 40,800 Required 2 Dirt Bikes $ 270,000 118,000 152,000 Complete this question by entering your answers in the tabs below. 8,700 20,700 40,500 54,000 123,900 Mountain Bikes $ 400,000 203,000 197,000 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? 40,700 7,200 38,500 80,000 166,400 $ 28,100 $ 30,600 Management is…
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…
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 $ 920,000 466,000 454,000 $ 264,000 112,000 152,000 Mountain Bikes $ 405,000 198,000 Racing Bikes $ 251,000 156,000 207,000 95,000 69,800 8,900 40,400 20,500 44,000 20,500 7,500 16,000 115,600 40,100 38,800 36,700 184,000 52,800 81,000 50,200 413,400 122,300 167,700 123,400 $ 40,600 $ 29,700 $ 39,300 $ (28,400) 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…
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 $ 300,000 120,000 180,000 30,000 23,000 35,000 60,000 148,000 $ 32,000 Dirt Bikes $ 90,000 27,000 63,000 Complete this question by entering your answers in the tabs below. Required 1 10,000 6,000 12,000 18,000 46,000 $ 17,000 Mountain Bikes $ 150,000 60,000 90,000 14,000 9,000 13,000 30,000 66,000 $ 24,000 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Racing Bikes $ 60,000 33,000 27,000 Management is concerned about the continued losses shown by the…
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 $ 928,000 461,000 467,000 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. 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. Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) 70,500 43,700 116,200 185,600 416,000 $ 51,000 Complete this question by entering your answers in the tabs below. Net operating…
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: 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 $ 927,000 478,000 449,000 $ 266,000 115,000 151,000 Mountain Bikes $ 409,000 204,000 205,000 Racing Bikes $ 252,000 159,000 93,000 69,200 8,200 40,200 20,800 42,700 20,200 7,400 15,100 115,000 40,700 38,000 36,300 185,400 53,200 81,800 50,400 412,300 122,300 167,400 122,600 $ 36,700 $ 28,700 $ 37,600 $ (29,600) 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: Check 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 $ 923,000 465,000 458,000 $ 267,000 113,000 154,000 Mountain Bikes $ 405,000 195,000 210,000 Racing Bikes $ 251,000 157,000 94,000 68,500 8,100 40,200 20,200 43,700 20,300 7,500 15,900 115,600 40,300 38,900 36,400 184,600 53,400 81,000 50,200 412,400 122,100 167,600 122,700 $ 45,600 $ 31,900 $ 42,400 $ (28,700) 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…
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…
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 $ 929,000 472,000 457,000 70,300 43,400 114,700 185,800 414, 200 $ 42,800 Required 1 Required 2 Dirt Bikes $ 267,000 Mountain Bikes $ 407,000 114,000 205,000 153,000 202,000 Complete this question by entering your answers in the tabs below. Racing Bikes $ 255,000 153,000 102,000 21,000 15,700 35,600 51,000 123,300 $ (21,300)
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) 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. Answer is not…