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: points Sales eBook Fixed expenses: Hint Print References Variable manufacturing and selling expenses Contribution margin 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 $ 931,000 468,000 463,000 $ 267,000 119,000 148,000 Mountain Bikes $ 405,000 198,000 Racing Bikes $ 259,000 151,000 207,000 108,000 69,600 8,900 40,400 20,300 44,200 20,900 7,900 15,400 115,000. 40,400 38,900 35,700 186,200 53,400 81,000 51,800 415,000 123,600 168,200 123,200 $ 48,000 $24,400 $ 38,000 5 (15,200) 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. 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? Financial advantage (disadvantage) per quarter Required 2 > Required 1 Required 2 Required 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. Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: Depreciation of special equipment Salaries of the product line managers Advertising, traceable Total traceable fixed expenses Product line segment margin (loss) Common fixed expenses Not operating income (loss) Totals Dirt Bikes Mountain Bikes Racing Bikes 0 0 o 0 0 0 0 $ 0 $ 0 $ 0 $ 0