Relevant Costing - Assignment i Saved 3 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: 10 points eBook Hint Print References Dirt Total Sales Variable manufacturing and selling expenses Contribution margin Mountain Racing Bikes Bikes Bikes $ 921,000 $267,000 $ 402,000 $252,000 470,000 111,000 205,000 451,000 156,000 197,000 154,000 98,000 Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) $ 38,000 $ 32,500 $30,000 $ (24,500) 70,200 8,800 40,500 20,900 43,100 20,300 7,200 15,600 115,500 41,000 38,900 35,600 184,200 413,000 53,400 123,500 80,400 167,000 122,500 50,400 *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. Help Save & Exit Submit Check my work