2 pts Question 2 A condensed income statement by product line for Regal Cycle Company indicated the following sales and expenses of its Dirt Bikes for the past year: Variable Fixed Total portion portion $48,000 $48,000 25,000 22,500 2,500 Sales Cost of goods sold Gross pront Operating expenses $23,000 26,000 20,800 5,200 Loss from operations $(3,000) 7.700 It is estimated that 10% of the cost of goods sold represents fixed factory overhead costs and that 20% of the operating expenses are fixed. Since Dirt Bikes are only one of many products, the fixed costs will not be materially affected if the product is discontinued. Regal should discontinue making Dirt Bikes because differential loss Is S(10.700). discontinue making Dirt Bikes because differential loss is $(3.000). continue making Dirt Bikes because differential income is $7.700. continue making Dirt Bikes because differential income is $4.700. Next Previous