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 $ 403,000 $ 252,000 477.000 110.000 209,000 158,000 442.000 154.000 194.000 94,000 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) 69,400 3,700 40,600 20,100 44,600 20,800 7,900 15,900 114,800 40,200 38,200 36,400 183,800 52,800 80,600 50,400 412,600 122,500 167130 122.368 $ 29,400 $ 31,500 $ 26,700 $(28,500) *Allocated on the basis of sales dollar 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 3 Required 2 Required 3 What is the finandal advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 2 > 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 a Should the production and sale of racing bikes be discontinued? Yes ON Required 1 Required 2 Required 3 Prepare a properly formatted segmented incorhe statement that would be more useful to management in assessing the long- run profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses Total traceable fixed expenses Product line segment margin (loss) Net operating Income (loss)
