1 The Regal Cycle Company manufactures three types of blcycles-a dirt bikea mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow B Book 51,280 Hent Mountain Total Racing Bikes Dirt Bikes Bikes Sales $ 929,000 $ 265,000 $400,000 5 256,000 Variable manufacturing and selling expenses 477,000 117,000 210,000 150.000 Contribution margin 452.000 148,000 198,000 186.se Fixed expenses: Advertising, traceable 69,400 8,600 40,100 20,700 Depreciation of special equipment 43,100 20,200 7,200 15,700 Salaries of product line managers 115,000 40,500 38,100 36,400 Allocated connon fixed expenses 185,800 53,000 81,600 Total fixed expenses 413,300 122,388 167, see 124,00 Net operating incone (loss) $ 38,700 $ 25,700 $ 31,00 5 (18,000) "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 property formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines, Print Ferences 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? Allocated common fixed expenses Total fixed expenses Net operating income (loss) 413,300 $ 38,700 122,300 $ 25,700 167,000 $ 31,000 12 $ (18 "Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommend the line should be discontinued. The special equipment used to produce racing bikes has no resale value a 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 profitability of the various product lines. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes O No 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-ru profitability of the various product lines Complete this question by entering your answers in the tabs below. 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. Totals Dirt Bikes Mountain Bikes Racing Bikes es Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (los) Net operating income (los)