1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ede4ka [16]
3 years ago
5

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 Dirt Bikes Mountain Bikes Racing Bikes Sales $ 927,000 $ 264,000 $ 407,000 $ 256,000 Variable manufacturing and selling expenses 471,000 114,000 200,000 157,000 Contribution margin 456,000 150,000 207,000 99,000 Fixed expenses: Advertising, traceable 69,600 8,900 40,300 20,400 Depreciation of special equipment 43,900 20,700 7,300 15,900 Salaries of product-line managers 115,800 40,900 38,400 36,500 Allocated common fixed expenses* 185,400 52,800 81,400 51,200 Total fixed expenses 414,700 123,300 167,400 124,000 Net operating income (loss) $ 41,300 $ 26,700 $ 39,600 $ (25,000) *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 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? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.
Business
1 answer:
Cloud [144]3 years ago
7 0

Answer: (1) From the income statement it is clear that the racing bike cannot meet its fixed cost because it cannot provide a contribution towards meeting the fixed cost (2) it should be discontinued since it cannot provide a contribution towards meeting its fixed cost (3)A Dirk bike has a profit of $26,700, A mountain bike has a profit of $39,600, A racing bike has a loss of ($25,000) Total profit for the product line is $41,300

Explanation:

Income statement

Dirk bike mountain bike. Racing bike. Total

$ $ $ $

Sales. 264,000. 407,000 256,000 927,000

Less :Variablecost 114,000. 200,000 157,000. 471,000

----------- -------------- ------------- ------------

Contribution margin 150,000 207,000 99,000 456,000

Less: Fixed cost

Fixed Advertising. 8,900. 40,300. 20,400 69,600

Depreciation of equipment 20,700 7,300 15,900 43,900

Salary of product line manager 40,900. 38,400 36,500 115,800

Allocated common fixed expenses 52,800 81,400 51,200. 185,400

----------- ------------- ---------- -------------

Total Fixed Expenses 123,300 167,400. 124,000 414,700

Net operating income(loss) 26,700 39,600 (25,000) 41,300

(1) From the income statement it is clear that racing bike cannot meet its fixed cost because it cannot provide contribution towards meeting its fixed cost

(2) it should be discontinued since it cannot provide a contribution towards meeting its fixed cost

(3) A Dirk bike has a profit of $26,700, A mountain bike has a profit of $39,600, A racing bike has a loss of ($25,000) Total profit for the product line is $41,300

You might be interested in
The country of Lilliput has low unemployment and high consumer spending, and small businesses are thriving. However, prices are
lara31 [8.8K]

Answer:

Raise the income tax, which gives citizens less money to spend, and buy more services from civilian - owned businesses, which creates more jobs.

Explanation:

To prevent inflation, Lilliput's government should raise the income tax, which gives citizens less money to spend and buys more services from a civilian-owned business, which creates more jobs.

In this way, it can increase employment and reduce consumer spending which in turn will prevent inflation.

7 0
3 years ago
Most audience members expect your presentation to include
Elan Coil [88]

Answer: Preview-view-review strategy.

Explanation: The preview-view-review strategy is used in many different learning environments. This process allows the presenter or teacher to preview the information that will be covered, go over the information being discussed and then review it as a conclusion at the end. By previewing the information, the audience is able to understand what topics will be covered, then learn about them in the view stage and have a summary of the information covered in the review.

6 0
3 years ago
Discounting cash flows involves
Triss [41]

Answer:

The correct answer is letter "D": discounting all expected future cash flows to reflect the time value of money.

Explanation:

Discounting cash flows takes place at any moment given when money is paid at one date but is received at a different point. Discounted cash flows are useful to measure the difference between the present value of money and the receivables that are expected to come at a later stage.

6 0
3 years ago
What are the <img src="https://tex.z-dn.net/?f=%20%5Ctt%20%5Cpink%7BPrinciples%7D%20" id="TexFormula1" title=" \tt \pink{Princip
Fantom [35]

\boxed{\huge \frak{answer}}

<h3>There are fourteen principles of management. They are:</h3>

  1. Division of work
  2. Authority and responsibility
  3. Discipline
  4. Unity of Command
  5. Unity of Direction
  6. Subordination of individual interest
  7. Remuneration
  8. Centralization
  9. Scaler Chain
  10. Order
  11. Equidity
  12. Stability
  13. Initiative
  14. Escript de Crops

\boxed{ \frak{have \: a \: nice \: day}}

\boxed{ \frak{be \: brainly}}

8 0
2 years ago
After shopping at a Cut-Price store, Dyan finds a fitness watch in her bag of purchases that she knows she did not pay for. If D
hram777 [196]

Answer:

A) conversion

Explanation:

Conversion is when someone wrongfully use property of another for their own purposes . In an action for conversion, the taking of the property may be lawful, but the retaining of the property is unlawful.

Same in this case retaining the fitness watch is unlawful to use the property which belongs to others.

5 0
3 years ago
Other questions:
  • You come across a scientific study reported in the New York Times. The study says that adults who played varsity sports in high
    14·1 answer
  • If the structural unemployment rate is 3%, the frictional unemployment rate is 2%, and the cyclical unemployment rate is 4%, the
    11·1 answer
  • Under the Uniformed Services Employment and Reemployment Rights Act of 1994, employers must reemploy workers who left jobs to fu
    12·1 answer
  • At a price $4 for good x, a firm is willing to supply 1,400 units of x. for a price of $5 for good x, the firm is willing to sup
    5·1 answer
  • A partnership intentionally created and recognized, orally or in writing is known as a(n) _____ partnership.
    8·1 answer
  • Suppose that real GDP per capita in the United States is $49,000. If the long-term growth rate of real GDP per capita is 1.6% pe
    8·1 answer
  • When a principal falsely leads a third party to believe that another individual serves as his or her agent, the principal has cr
    5·1 answer
  • Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment cos
    5·1 answer
  • What are some of the various potential sources for business credit? Give at least three examples
    10·1 answer
  • In year 1, Heron Corp. has depreciation expense for income statement purposes of $10,000. The depreciation deduction on the tax
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!