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: Check my w ints Skipped eBook Hint Print 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) eferences "Allocated on the basis of sales dollars. Total $ 928,000 Mountain Dirt Bikes Bikes $262,000 $ 407,000 Racing Bikes $ 259,000 464,000 464,000 113,000 193,000 149,000 214,000 158,000 101,000 69,800 8, 200 40,900 20,700 43,300 20,400 7,800 15,100 114,400 40,900 38,300 35,200 185,600 413,100 52,400 121,900 81,400 168,400 51,800 122,800 $ 50,900 $ 27,100 $ 45,600 $ (21,800) 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. Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Total fixed expenses Allocated common fixed expenses ed Net operating income (loss) "Allocated on the basis of sales dollars. Saved 464,000 113,000 193,000 158, 000 464,000 149,000 214,000 101,000 69,800 8,200 40,900 20,700 43,300 20,400 7,800 15,100 114,400 40,900 38,300 35, 200 185,600 52,400 81,400- 51,800. 413,100 121,900 168,400 122,800 $ 50,900 $ 27,100 $ 45,600 $ (21,800) Help Save & Ex k t ces 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. Chee