2 parts

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: Book 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 (101) Dirt Mountain Racing Total Bikes Bikes Bikes $924,000 $261,000 $404,000 5 259.000 466,000 115,000 194,000 157,000 458,000 146,000 210,000 102,000 68.900 8,300 40,500 20.100 43,200 20,200 7,600 15.400 115.000 40,100 38,600 36,300 184.800 52,200 $0.800 51,800 411.900 120.800 167,500 123,600 $ 46,100 5 25,200 $ 42,500 5(21,600) onces *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. 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? 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 0 0 0 0 Contribution margin (105) Traceable fixed expenses: 0 0 0 Total traceable fixed expenses Product line segment margin (loss) 0 0 $ $ 0 $ 0 Net operating income (loss) $ 0