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: 1.5 points Sales Skipped eBook Hint 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 Dirt Bikes $ 918,000 452,000 466,000 $ 263,000 111,000 152,000 Mountain Bikes $ 401,000 191,000 210,000 Racing Bikes $ 254,000 150,000 104,000 69,900 9,000 40,600 20,300 43,300 20,400 7,800 15,100 114,500 40,100 38,900 35,500 183,600 52,600 80,200 50,800 411,300 122,100 167,500 121,700 $ 54,700 $ 29,900 $ 42,500 $ (17,700) Print References 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. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? < Required 1 Required 2 >