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 Rac Total Bikes Bikes Bil $935,000 $269,000 $408,000 $ 258 476,000 114,000 206,000 156 459,000 155,000 202,000 102 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) 69,800 8,700 40,300 2e 43,300 20,300 7,400 15 115,500 40,000 38,600 36 187,000 53,800 81,600 51 415,600 122,800 167,900 124 $ 43,400 $ 32,200 $ 34,100 $(22, "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 What is the financial advantage (disadvantage) per quarter of discontinuing the racing bik Prev 1 of 6 Next > ctures three types of bicycles-a dirt bike, a Data on sales and expenses for the past quarter Dirt Mountain Racing Total Bikes Bikes Bikes $935,000 $269,000 $ 408,000 $ 258,000 476,000 114,000 206,000 156,000 459,000 155,000 202,000 102,000 lling ipment nagers nses* 69,800 8,700 40,300 20,800 43,300 20,300 7,400 15,600 115,500 40,000 38,600 36,900 187,000 53,800 81,600 51,600 415,600 122,800 167,900 124,900 $ 43,400 $ 32,200 $ 34,100 $(22,900) llars. he continued losses shown by the racing bikes whether or not the line should be discontinued. oduce racing bikes has no resale value and does disadvantage) per quarter of discontinuing the of racing bikes be discontinued? gmented income statement that would be more g the long-run profitability of the various product