1 Seved The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike,...

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1 Seved 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: Help Save & Exit Submit Check my work ts Sales kloped Variable manufacturing and selling expenses Contribution margin Total $923,000 477,000 Dirt Bikes $267,000 Mountain Bikes 402,000 116,000 205,000 446,000 151,000 197,000 Racing Bikes $254,000 156,000 94,000 Fixed expenses Advertising, traceable 69,400 8,900 40,300 20,300 Priat Book Hint Total fixed expenses Net operating income (loss) Depreciation of special equipment 44,000 20,600 7,400 14,000 Salaries of product-line managers 114,100 40,000 38,900 35,200 Allocated common fixed expenses 186,500 53,400 80,400 50,900 412,100 122,000 167,000 122, 300 $33,900 $29,200 $30,000 $(24,300) rences "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: 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. 1 Seved 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: Help Save & Exit Submit Check my work ts Sales kloped Variable manufacturing and selling expenses Contribution margin Total $923,000 477,000 Dirt Bikes $267,000 Mountain Bikes 402,000 116,000 205,000 446,000 151,000 197,000 Racing Bikes $254,000 156,000 94,000 Fixed expenses Advertising, traceable 69,400 8,900 40,300 20,300 Priat Book Hint Total fixed expenses Net operating income (loss) Depreciation of special equipment 44,000 20,600 7,400 14,000 Salaries of product-line managers 114,100 40,000 38,900 35,200 Allocated common fixed expenses 186,500 53,400 80,400 50,900 412,100 122,000 167,000 122, 300 $33,900 $29,200 $30,000 $(24,300) rences "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: 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.