Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. the regal cycle company manufactures three types o

The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and...

70.2K

Verified Solution

Question

Accounting

The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

Total Dirt Bikes Mountain Bikes Racing Bikes
Sales $ 300,000 $ 90,000 $ 150,000 $ 60,000
Variable manufacturing and selling expenses 120,000 27,000 60,000 33,000
Contribution margin 180,000 63,000 90,000 27,000
Fixed expenses:
Advertising, traceable 30,000 10,000 14,000 6,000
Depreciation of special equipment 23,000 6,000 9,000 8,000
Salaries of product-line managers 35,000 12,000 13,000 10,000
Allocated common fixed expenses* 60,000 18,000 30,000 12,000
Total fixed expenses 148,000 46,000 66,000 36,000
Net operating income (loss) $ 32,000 $ 17,000 $ 24,000 $ (9,000)

*Allocated on the basis of sales dollars.

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?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

An insulated beaker with negligible mass contains liquid water with a mass of 0.250 kg and...

Physics
Q

Question 24 1 po One day you go outside and see that the cars on...

Biology
Q

marks The system shown in the figure is initially at origin and is moving with...

Physics
Q

a 4 b 3 c 2 d 2 Consider a long straight wire of cross...

Physics
Q

A principal of $4400 is invested at 7.5% interest, compounded annually. How much will the...

Basic Math
Q

Give the names of two other statistics that have the same value as the 50th...

Basic Math
Q

A manufacturer of personal computers tests competing brands and finds that the amount of energy...

Basic Math
Q

Find an equation of the line passing through the given points. Use function notation to...

Basic Math
Q

this is a master budget and i need income statement and balance sheet from the...

Accounting
Q

The following information relates to Company Beta Limited: Beta (Public Company) Limited Summary...

Accounting
Q

Master Budget Plum Inc. has gathered the following budgeting information for next year and has...

Accounting
Q

16 All of the following are eligible for coverage under a...

Finance