Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and enses for the past quarter follow: Dirt Mountain Racing Total Bikes Bikes Bikes $ 932,000 $266,000 $ 406,000 $ 260,000 464,000 12 , 193,000 151,000 468,000 146,000 213,000 109, eee ales ariable 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) 69,300 8,600 40,100 20,600 43,300 20, 200 7,400 15,700 114,700 40, 800 38, 2ee 35,700 186,400 53,200 81,200 52, 413,700 122,800 166,900 124, eee $ 54,300 $ 23,200 $ 46,100 $(15, 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 Prev 1 of 5 Next > 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? Financial (disadvantage) per quarter Prepare a properly formatted segmented income statement that would be more useful to management in asse run profitability of the various product lines. Totals Dirt Bikes Mountain Bikes $ 932,000 $ 464,000 468,000 266,000 $ 120,000 146,000 406,000 193,000 213,000 Racing Bikes $ 260,000 151,000 109,000 Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers Total traceable fixed expenses Product line segment margin (loss) Common fixed expenses Net operating income (loss) 69,300 43,300 114,700 227,300 240,700 $ 8,600 20,200 40,800 69,600 76,400 $ 40,100 7,400 38,200 85,700 127,300 $ 20,600 15,700 35,700 72,000 37,000 $ 240,700