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 43,800 115,300 185,400 414, 200 $ 40,800 Dirt Bikes $ 270,000 118,000 152,000 Mountain Bikes $ 400,000 203,000 197,000 Racing Bikes $ 257,000 151,000 106,000 8,700 40,700 20,300 20,700 7,200 15,900 40,500 38,500 36,300 54,000 80,000 51,400 123,900 166,400 123,900 $ 28,100 $ 30,600 $ (17,900) 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?
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 43,800 115,300 185,400 414, 200 $ 40,800 Dirt Bikes $ 270,000 118,000 152,000 Mountain Bikes $ 400,000 203,000 197,000 Racing Bikes $ 257,000 151,000 106,000 8,700 40,700 20,300 20,700 7,200 15,900 40,500 38,500 36,300 54,000 80,000 51,400 123,900 166,400 123,900 $ 28,100 $ 30,600 $ (17,900) 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?
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 4EB: Roper Furniture manufactures office furniture and tracks cost data across their process. The...
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