Check my The Regal Cycle Company manufactures three types of bicycles-a dirt bik
ID: 2515963 • Letter: C
Question
Check my 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 Moun tain Total $ 938,890 $268,e00 $ 410,000 $ 260,000 Sales Variable manufacturing and selling expenses481,00 118,026,0157,e00 Contribution margin Fixed Advertising, traceable Deprec Salarles of product-line managers Allocated conmon fixed expenses 70,20e 8,6ee 40,800 28,800 7,90015,3ee 114,9ee 40,800 38,480 35,700 187,60 53,6 82,52,000 416,280 123,380 169,100123,800 S 48,88 26,700 $34,980 $(20,880) lat ion of special equipment 43, see 2e,38e 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 out not the line should be discontinued The special equipment used to produce racing bikes has no resale value and does not wear Prey 1 of 1 NextExplanation / Answer
total if Difference racing bike Current are 1-a) total dropped Sales 938,000 678000 -260,000 Variable expenses 481,000 324000 157,000 contribution margin (loss) 457,000 354000 -103,000 fixed expenses Advertising,traceable 70,200 49400 20,800 Depreciation on special equipment 43,500 43,500 0 Salaries of product managers 114,900 79200 35,700 common allocated costs 187,600 187,600 0 total fixed expenses 416,200 359700 56,500 Net operating income(loss) 40,800 -5700 -46,500 Net financial disadvantage $46,500 2) No 3) Segmented Income statement Dirt mountain Racing total bikes bikes bikes sales 938,000 268,000 410,000 260,000 variable manufacturing and selling expense 481,000 118,000 206,000 157,000 contribution margin (loss) 457,000 150,000 204,000 103,000 traceable fixed expenses advertising 70,200 8,600 40,800 20,800 depreciation on special equipment 43,500 20,300 7,900 15,300 salaries of the product line managers 114,900 40,800 38,400 35,700 total traceable fixed expenses 228,600 69,700 87,100 71,800 product line segment margin 228,400 80,300 116,900 31,200 common fixed expenses 187,600 net operating income(loss) 40,800 2b) yes