Saved Help S 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: Dirt Mountain Racing Total Bikes Bikes Bikes $ 919,000 $264,000 $ 404,089 $ 251,000 452,000 111,000 190,000 151,000 467,000 153,000 214,000 100,000 Sales 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 Net operating income (loss) 69,500 9,000 40,200 20,300 43,700 20,900 7,200 15,600 115,100 41,000 38,800 35,300 183,800 52,800 80,800 50,200 412,100 123,700 167,000 121,400 $ 54,900 $ 29,300 $ 47,000 $(21,400) "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 racina bikes be discontinued? Prey 1 of 3 !!! Next > i O e search E 11 Saved Help Save & E Chee vepreciation or special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) 43,00 20,99 1,23 15, 115,180 41,800 38,800 35,300 183,800 52,800 89,800 50,200 412,180 123,700 167,000 121,400 $ 54,900 $ 29,300 $ 47,000 $(21,400) "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. Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Prey 1 of 3 III Next > search o RA e