CUELA W WUIK 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: 10 points Dirt Mountain Racing Total Bikes Bikes Bikes $ 922,000 $262,000 $ 404,000 $ 256,000 477,000 116,000 205,000 156,000 445,000 146,000 199,000 100,000 eBook 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) 69,400 8,500 42,900 20,200 114,700 40,600 184,400 52,400 411,400 121,700 33,600 $ 24,300 $ 40,100 20,800 7,100 15,600 38,800 35,300 80,800 51,200 166,800 122,900 32,200 $(22,900) Hint $ Print *Allocated on the basis of sales dollars. References 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? Required 1 Required 2 >