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.TotalsDirt BikesMountain BikesRacing BikesContribution margin (loss)Traceable fixed expenses:Total traceable fixed expensesProduct line segment margin (loss)$$$Net operating income (loss) The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales andexpenses for the past quarter follow:DirtMountainRacingTotalBikesBikesBikesSales$ 926,000 $270,000 $ 405,000 $ 251,000Variable manufacturing and selling466,000117,000198,000151,000expensesContribution margin460,000153,000207,000100,000Fixed expenses:Advertising, traceableDepreciation of special equipmentSalaries of product-line managersAllocated common fixed expenses*40,5007,30038,70081,00020,50015,90035,60050,200122,20069,60043,700115,000185,2008,60020,50040,70054,000Total fixed expenses413,500123,800167,500Net operating income (loss)$ 46,500 $ 29,200 $ 39,500 $ (22,200)*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 notthe line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Income statement: When all the costs and expenses are subtracted one by one from the sale, then if…

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. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) $ $ $ Net operating income (loss) $

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. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) $ $ $ Net operating income (loss) $

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 6PA: Using the information from BDS Enterprises, prepare the income statement to include all costs, but...

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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: 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 $ 924,000 469,000 455,000 69,600 43,700 115,900 184,800 414,000 $ 41,000 Required 1 Dirt Bikes $269,000 118,000 151,000 Required 2 Required 3 8,300 20,800 40,600 53,800 123,500 $ 27,500 Complete this question by entering your answers in the tabs below. Mountain Bikes $ 404,000 193,000 211,000 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…
Using the information from BDS Enterprises, prepare the income statement to include all costs, but separate out uncontrollable costs. Insert subtotals where appropriate (include one for operating income) before the uncontrollable costs. Income tax expense should be based on all expenses (that is, it will be the same amount as in question 1). Calculate net income, profit margin, ROI, and RI, excluding uncontrollable expenses. Prepare a short response to accompany the income statement that explains why uncontrollable costs are separated in the income statement.
Which of the following does not represent a cost-volume-profit analysis equation? O a. Contribution margin - fixed expenses - profit = 0 O b. Profit = contribution margin + fixed expenses O c. Sales = total expenses+ profit O d. Sales- fixed expenses – variable expenses = 0 O e. Sales+ fixed expenses + profit = contribution margin + sales US PAGE NE re to search 144 ort sc delete home %23 & 4. backspace R T. U D G K enter pause C M alt ctrl
Which of the following does not represent a cost -volume -profit analysis equation a. Sales = totale expenses + profit b. Sales + fixed expenses profit = contribi argin + sales c. Profit = contrib contribution margin - fixed expenses d. Contribution margin- fixed expenses - profit 0 e. Sales - fixed expenses - variable expenses ses = 0
Match each of the following descriptions with the appropriate term. Clear All Plots only the difference between total sales and total costs Indicates the possible decrease in sales that may occur before operating loss results Graphically shows costs, sales, and operating profit or loss at various levels of units sold The relative distribution of sales among products sold by a company Contribution margin divided by operating income Margin of safety Operating leverage Profit-volume chart Sales mix Cost-volume-profit chart mg malt
Using the information for Lighthizer Trading Company, prepare the income statement to include all costs, but separate out uncontrollable costs. Insert subtotals where appropriate (include one for operating income) before the uncontrollable costs. Income tax expense should be based on all expenses (that is, it will be the same amount as in the previous exercise). Calculate net income, profit margin, ROI, and RI excluding uncontrollable expenses. Prepare a short response to accompany the income statement that explains why uncontrollable costs are separated in the income statement.
Which of the following does not represent a cost-volume-profit analysis equation? O a. Contribution margin - fixed expenses-profit = 0 b. Profit = contribution margin + fixed expenses Sales + fixed expensas + profit = contribution margin + sales O d. Sales = total expenses + profit O e. Sales - fixed expenses - variable expenses = 0 %D CLEAR MY CHOICE AGE
In the cost-volume- profit graph (above), what is represented by the point marked "A"? Question 1 options: Breakeven point Fixed expenses Operating income area Operating loss area
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: 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 $ 921,000 469,000 452,000 69,700 44,500 114,800 184, 200 413, 200 $ 38,800 Dirt Bikes $ 268,000 110,000 158,000 8,800 20,900 40,400 53,600 123,700 $ 34,300 Mountain Bikes $ 400,000 208,000 192,000 40,600 7,900 38,600 80,000 167,100 $ 24,900 Racing Bikes $ 253,000 151,000 102,000 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? 20, 300 15,700 35,800 50,600 122,400 $ (20,400) Management is concerned…
Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. ( Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, and then compute the missing items.)a. Assume that only one product is being sold in each of the four following case situations:Contribution Net OperatingUnits Variable Margin Fixed IncomeCase Sold Sales Expenses per Unit Expenses (Loss)1 .......... 15,000 $180,000 $120,000 ? $50,000 ?2 .......... ? $100,000 ? $10 $32,000 $8,0003 .......... 10,000 ? $70,000 $13 ? $12,0004 .......... 6,000 $300,000 ? ? $100,000 $(10,000)
Match each of the following descriptions with the appropriate term. Clear All Plots only the difference between total sales and total costs Indicates the possible decrease in sales that may occur before operating loss results Graphically shows costs, sales, and operating profit or loss at various levels of units sold The relative distribution of sales among products sold by a company Contribution margin divided by operating income Profit-volume chart Cost-volume-profit chart Operating leverage Margin of safety Sales mix
When using a segmented income statement, what is the best number to look at to determine the effect of the elimination of a segment on the net operating income of the company as a whole? O Multiple Choice the product line's sales dollars the product line's contribution margin the product line's segment margin the product line's segment margin minus an allocated portion of common fixed expenses