g umy o segment (LU11-2 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 $924,000 $263,800 $ 408,000 $ 253,000 472,000 113,000 284,000 155,000 452,000 150,000 204,889 98,000 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) 69,700 43,900 8,500 29,800 40,400 7,700 29,800 15,400 114,400 40,700 184,890 52,600 412,890 122,600 $ 39,200 $ 27,400 $ 38,000 35,700 81,600 50,600 167,700 122,500 36,300 $(24,500) Prev 1 15 Next search "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. she below 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 2 > Prev 1 of 13 | Next > arch