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1 16.66 po H The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike Data on

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1 16.66 po H 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 expense Advertising, traceable Depreciation of special equipment Salaries of product-1ine managers Allocated com fixed expenses Total fixed eq Net operating income (loss) total $324,000 Dire Racing Re $255,000 200,000 49,500 40,700 43,700 114,300 504,00 25.500 40,000 53,000 123,100 35,000 167,100 $55,700 $32,700 01 P 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 Complete this question by entering your answers in the tabs below. "Allocated on the basis of sales dollars Required Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

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