er 11 Homework Check my 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: Dirt Mountain Racing Total Bikes Bikes Bikes $ 922,000 $267,000 $ 403,000 $ 252,000 465,000 113,000 194,000 158,000 457,000 154,000 209,000 94,000 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) 69,600 8.600 40.100 20,900 44,100 20.900 7.500 15.700 115,400 40,300 3 8,100 37,000 184,400 53,400 80, 600 5 0,400 413,500 123,200 166,300 124,000 $ 45,500 $ 30,800 $ 42,700 $(30,000) "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 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 Homework Che 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 un profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes 0 0 L Sales Variable manufacturing and selling expenses Contribution margin (los) + Traceable fixed expenses: Advertising Depreciation of special equipment Salaries of the product line managers I I I os Total traceable fixed expenses Product line segment margin (loss) Common foxed expenses Net operating income (loss) Required 2