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1 1 The Regal Cycle Company manufactures three types of bicycles- dirt bike, a mountain bike, and a racing bike. Data on sales and expenses
1 1 The Regal Cycle Company manufactures three types of bicycles- dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: 0.9 point Dirt Mountain Racing Total Bikes Bikes Bikes $933,000 $270, $ 407,000 $ 256,000 422, NO 111.000 202.OND 158,00 46100159 2840 e 98,080 & 10450 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses Advertising, traceable Depreciation of special equipment Salaries of product line managers Allocated on fixed expenser Total fixed expenses Het operating income (loss) 400 68,00 8900 40,300 20, 200 44,700 21,000 7.800 15,90 115.400 40,00 38,700 36,700 26.000 51,200 412 $45.00 5.35,700$ 35,00 5(26,000) ort "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 equipient used to produce racing bikes has no resale value and does not wear out Required: 1. What's the financial advantage (disadvantage per quarter of discontinuing the racing bikes? 3. Prepare a properly formatted tegmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines Complete this question by entering your answers in the tabs below. Required: Required Required What is the financial advantage disadvanta
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