Please do not give solution in image format thanku The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on salesand expenses for the past quarter follow:TotalSales$930,000Dirt Bikes$265,000 $ 406,000MountainBikesRacing Bikes$ 259,000Variable manufacturing and selling expenses.471,000111,000200,000160,000Contribution margin459,000154,000206,00099,000Fixed expenses:Advertising, traceable.69,9008,20041,00020,700Depreciation of special equipment43,70020,1007,60016,000115,60040,40038,90036,300186,00053,00081,20051,800415,200121,700168,700124,800$ 43,800$ 32,300 $ 37,300 $ (25,800)Salaries of product-line managersAllocated common fixed expenses*Total fixed expensesNet operating income (loss)"Allocated on the basis of sales dollars.Management is considering discontinuing the racing bikes. The special equipment used to produce racing bikes has noresale 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?

Step 1: Compute for the financial advantage/disadvantage for the company. Contribution Margin that…

Answered: The Regal Cycle Company manufactures…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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: Total DirtBikes Mountain Bikes RacingBikes Sales $ 924,000 $ 264,000 $ 407,000 $ 253,000 Variable manufacturing and selling expenses 477,000 115,000 209,000 153,000 Contribution margin 447,000 149,000 198,000 100,000 Fixed expenses: Advertising, traceable 69,800 8,100 40,900 20,800 Depreciation of special equipment 44,100 20,700 7,800 15,600 Salaries of product-line managers 113,800 40,000 38,600 35,200 Allocated common fixed expenses* 184,800 52,800 81,400 50,600 Total fixed expenses 412,500 121,600 168,700 122,200 Net operating income (loss) $ 34,500 $ 27,400 $ 29,300 $ (22,200) *Allocated on the basis of sales dollars. 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: Total DirtBikes Mountain Bikes RacingBikes Sales $ 927,000 $ 266,000 $ 409,000 $ 252,000 Variable manufacturing and selling expenses 471,000 111,000 202,000 158,000 Contribution margin 456,000 155,000 207,000 94,000 Fixed expenses: Advertising, traceable 70,200 8,900 40,800 20,500 Depreciation of special equipment 44,100 20,600 8,000 15,500 Salaries of product-line managers 114,600 40,400 38,400 35,800 Allocated common fixed expenses* 185,400 53,200 81,800 50,400 Total fixed expenses 414,300 123,100 169,000 122,200 Net operating income (loss) $ 41,700 $ 31,900 $ 38,000 $ (28,200) *Allocated on the basis of sales dollars. 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: Mountain Racing Bikes $ 254,000 151,000 Total Dirt Bikes Bikes $ 925,000 466,000 459,000 $ 269,000 119,000 150,000 $ 402,000 196,000 206,000 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: 103,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses 70,300 43,300 116,100 185,000 414,700 $ 44,300 9,000 20,100 41,000 53,800 123,900 $ 26,100 40,600 7,700 38,600 80,400 167,300 20,700 15,500 36,500 50,800 123,500 $ (20,500) Net operating income (loss) $ 38,700 *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…
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: Mountain Bikes $ 929,000 $269,000 $400,000 $ 260,000 Dirt Bikes Racing Bikes Total 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 466,000 118,000 193,000 155,000 463,000 151,000 207,000 105,000 69,400 43,300 114,800 185,800 413,300 8,900 20,300 40,300 53,800 40,100 7,200 38,800 20,400 15,800 35,700 52,000 123,900 80,000 166,100 $ 49,700 $ 27,700 $ 40,900 $(18,900) 123,300 es 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…
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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 Dirt Bikes Mountain Bikes Racing Bikes Total $90,000 $150,000 $70,000 $310,000 Variable manufacturing and selling 27,000 60,000 40,000 127,000 expenses Contribution Margin $63,000 $ 90,000 $30,000 $183,000 Fixed expenses Advertising 10,000 14,000 15,000 39,000 Depreciation of special equipment 6,000 9,000 2,000 17,000 Salaries of product line managers 12,000 13,000 18,000 43,000 Allocated common fixed expense 18,000 30,000 4,000 52,000 Total fixed expenses $46,000 $66,000 $39,000 $151,000 Net operating income (loss) $17,000 $24,000 $ (9,000) $ 32,000 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. Should 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: Dirt Bikes Mountain Bikes $ 933,000 $267,000 $ 407,000 $ 259,000 190,000 Racing Bikes Total 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 455,000 478,000 113,000 152,000 154,000 217,000 107,000 69,800 43,000 114,100 186,600 413,500 40,500 7,200 8,700 20,600 40,100 53,400 20,600 15, 200 35,500 51,800 38,500 81,400 122,800 167,600 123,100 Net operating income (loss) $64,500 $ 31,200 $ 49,400 $(16,100) *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…
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 $ 924,000 Dirt Bikes 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…
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 $ 920,000 469,000 451,000 $ 266,000 111,000 155,000 Mountain Bikes $ 402,000 200,000 Racing Bikes $ 252,000 158,000 202,000 94,000 69,200 8,400 40,400 20,400 44,000 21,000 7,700 15,300 114,700 40,300 38,600 35,800 184,000 53,200 80,400 50,400 411,900 122,900 167,100 121,900 $ 39,100 $ 32,100 $ 34,900 $ (27,900) 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…
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) Racing Bikes Dirt Total Bikes $928,000 $270,000 $ 406,000 $ 252,000 471,000 114,000 202,000 155,000 457,080 156,000 204,000 97,000 69,980 44,500 114, 2980 185,600 40,900 20,500 7,780 15,980 38,500 35,500 81,200 50,400 414, 200 123,600 168,300 122,300 $ 42,800 $ 32,400 $ 35,700 $(25,300) Mountain Bikes 8,500 20,900 40,200 54,000 "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…
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: Total $ 917,000 460,000 457,000 Dirt Bikes $ 264,000 111,000 153,000 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. 70,000 44,400 115,700 183,400 413,500 $ 43,500 Required 1 38,700 80,400 167,800 $ 43,200 Racing Bikes $ 251,000 158,000 93,000 20,600 15,600 36,400 50, 200 122,800 $ (29,800)

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