s-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses fo

Question

s-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Dirt Bikes Mountain Bikes acing Bikes Total $930,000 270,000 $ 403,000 $257,000 463,000 115,000 193,000 155,000 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: 467,000 155,000 210,000 102,000 8,300 40,600 20,500 7,800 15,200 115,200 40,500 38,900 35,800 186,00054,000 80,600 51,400 69,400 43,60020,600 Advertising, traceable Depreciation of special equipment Salaries of product-line managers common fix Total fixed expenses 414,200 123,400 167,900 122,900 Net operating income (loss) $ 52,800 31,600 S 42,100 S (20,900) 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 1a. What is the impact on net operating income by discontinuing racing bikes? (Decreases should be indicated by a minus sign.) Difference: Net Operating Total If Racing BikesIncome Are Dropped Current Total Increase or (Decrease) Contribution margin (loss) Fixed expenses:

Explanation / Answer

total if Difference racing bike Current are 1-a) total dropped Sales 930,000 673000 -257,000 Variable expenses 463,000 308000 155,000 contribution margin (loss) 467,000 365000 -102,000 fixed expenses Advertising,traceable 69,400 48900 20,500 Depreciation on special equipment 43,600 43,600 0 Salaries of product managers 115,200 79400 35,800 common allocated costs 186,000 186,000 0 total fixed expenses 414,200 357900 56,300 Net operating income(loss) 52,800 7100 -45,700 1-b) No 2a) Segmented Income statement Dirt mountain Racing total bikes bikes bikes sales 930,000 270,000 403,000 257,000 variable manufacturing and selling expense 463,000 115,000 193,000 155,000 contribution margin (loss) 467,000 155,000 210,000 102,000 traceable fixed expenses advertising 69,400 8,300 40,600 20,500 depreciation on special equipment 43,600 20,600 7,800 15,200 salaries of the product line managers 115,200 40,500 38,900 35,800 total traceable fixed expenses 228,200 69,400 87,300 71,500 product line segment margin 238,800 85,600 122,700 30,500 common fixed expenses 186,000 net operating income(loss) 52,800 2b) yes

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.