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: Sales Variable manufacturing and selling expenses Contribution margin Total $ 927,000 474,000 453,000 Dirt Bikes $ 267,000 111,000 156,000 70,000 43,600 114,800 185,400 413,800 $ 39,200 Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) 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. Mountain Bikes $ 402,000 205,000 197,000 8,700 20,400 40,200 53,400 122,700 $33,300 by entering your answers in the tabs below. Racing Bikes $ 258,000 158,000 100,000 40,500 20,800 8,000 15,200 38,600 36,000 80,400 51,600 167,500 123,600 $ 29,500 $ (23,600) 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.

The Regal Cycle Company manufactures three types of bicycles - a ditt blke, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: 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 of not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required: 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 uselul to management in assessing the long-run rofitability of the various product lines. the line should be discoed about the continued losses shown by the racing bikes and wants a recommendation as to whether or not 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 iong-run profitability of the varlous product lines. Complete this question by entering your answers in the tabs below. What is the financiaf advantage (disadvantage) per quarter of discontinuing the Racing Blkes? Management is concerned about the continued losses shown by the racing blkes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce tacing 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 properiy formatted segmented income statement that would be more useful to management in assessing the Iong-run profitability of the various product lines. Complete this question by entering your answers in the tabs below. Should the production and sale of racing bikes be discontinued? 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 vour answers in the tabs below. 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