Module 10 HW (Ch.13) Saved 1 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: 2 points Sales eBook 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 Hint Net operating income (loss) *Allocated on the basis of sales dollars. Print Total Dirt Bikes Mountain Bikes $ 932,000 484,000 448,000 $ 270,000 118,000 152,000 $ 407,000 210,000 197,000 Racing Bikes $ 255,000 156,000 99,000 70,600 8,900 40,900 20,800 42,600 20,200 7,300 15,100 114,600 40,100 38,300 36,200 186,400 54,000 81,400 51,000 414,200 123,200 167,900 123,100 $ 33,800 $ 28,800 $ 29,100 $ (24,100) 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 > Help