Imperial Jewelers manufactures and sells a gold bracelet for $401.00. The companys accounting system says that the unit product cost for this bracelet is $254.00 as shown below: Direct materials $ 142 Direct labor 81 Manufacturing overhead 31 Unit product cost $ 254 The members of a wedding party have approached Imperial Jewelers about buying 26 of these gold bracelets for the discounted price of $361.00 each. The members of the wedding party would like special filigree applied to the bracelets that would require Imperial Jewelers to buy a special tool for $467 and that would increase the direct materials cost per bracelet by $13. The special tool would have no other use once the special order is completed. To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $14.00 of the overhead is variable with respect to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding partys order using its existing manufacturing capacity. Required: 1. What is the financial advantage (disadvantage) of accepting the special order from the wedding party? 2. Should the company accept the special order? The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 927,000 $ 266,000 $ 402,000 $ 259,000 Variable manufacturing and selling expenses 474,000 118,000 199,000 157,000 Contribution margin 453,000 148,000 203,000 102,000 Fixed expenses: Advertising, traceable 69,000 8,200 40,600 20,200 Depreciation of special equipment 44,500 20,900 7,900 15,700 Salaries of product-line managers 114,300 40,200 38,800 35,300 Allocated common fixed expenses* 185,400 53,200 80,400 51,800 Total fixed expenses 413,200 122,500 167,700 123,000 Net operating income (loss) $ 39,800 $ 25,500 $ 35,300 $ (21,000) *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.