The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 922,000 $ 262,000 $ 408,000 $ 252,000 Variable manufacturing and selling expenses 461,000 113,000 195,000 153,000 Contribution margin 461,000 149,000 213,000 99,000 Fixed expenses: Advertising, traceable 69,700 8,800 40,700 20,200 Depreciation of special equipment 43,100 20,200 7,400 15,500 Salaries of product-line managers 114,300 40,900 38,000 35,400 Allocated common fixed expenses* 184,400 52,400 81,600 50,400 Total fixed expenses 411,500 122,300 167,700 121,500 Net operating income (loss) $ 49,500 $ 26,700 $ 45,300 $ (22,500) *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.

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What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

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 Bikes? 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? OYes O No 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: Total traceable fixed expenses Product line segment margin (loss) 0 0 0 0 0 0 0 0 % % % Net operating income (loss)