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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

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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 $926,000 $262,000 $ 400,000 $ 256,000 465,000 116,00 197,000 152,000 461,000 146,000 211,000 104,000 Sales Variable sanufacturing and selling expenses Contribution margin Fixed expenses Advertising, traceable Depreciation of special equipment Salaries of product - Wine managers Allocated common fixed expenses Total fixed expenses Het operating income (loss) 69,400 8,300 40,300 20,800 42,800 20,200 7,500 15,100 115,800 40,400 38,800 36,600 185,200 52,400 81,600 51,200 613,200 121,300 168,200 123,700 $ 47,800 $ 24,700 $ 42,800 $(19,700) "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 property 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. ences Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Required 2 > 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? Ores ONO Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 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. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses 0 0 0 0 Total traceable foed expenses Product line segment margin (loss) 0 0 0 0 0 5 05 0 $ 0 Net operating income oss) S 0

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