Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? OYes ONO

The Regal Cycle Company manufactures three types of bicyclesa dirt bike. a mountain bike. and a racing bike. Data on sales and ooa 000 165,000 114,000 200, 000 tsr,ooo '0, 900 114,600 zoo 400 go 200 800 S JO. 200 expenses for the past quarter follow: Variable manufacturing and ell ing Advertininq, ot "penoe Allocated on the basis Of sales dollars. rotal s 921 Ooo 462 o,J00 soo 400 SOO til ooo 8, 400 goo 000 S 239,000 000 z.. coo 15,900 36,000 700 Management Is concerned about the continued k)Sses shown by the racing bikes and wants o 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: I. 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 fong-run profitability ot the various product lines