1 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: 3.75 points Total $ 929,000 469,000 460,000 Dirt Bikes $ 264,000 111,000 153,000 Mountain Bikes $ 407,000 205,000 202,000 Racing Bikes $ 258,000 153,000 105,000 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) 69,100 43,200 115,600 185,800 413,700 $ 46,300 8,100 20,300 40,500 52,800 121,700 $ 31,300 40,500 7,600 38,600 81,400 168, 100 $ 33,900 20,500 15,300 36,500 51,600 123,900 $ (18,900) *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: 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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter $ (42,700) X Required 1 Required 2 >