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 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. Total Dirt Bikes $ 926,000 469,000 $262,000 120,000 Mountain Bikes $ 407,000 197,000 Racing Bikes $257,000 152,000 457,000 142,000 210,000 105,000 68,900 8,200 40,600 20,100 44.200 20,700 8,000 15,500 114,500 40,700 38,100 35,700 185,200 412,800 52,400 81,400 51,400 122,000 168,100 122,700 $ 44,200 $ 20,000 $ 41,900 $ (17,700) 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 Bikes? ter i Graded Homework 2 expenses for the past quarter follow: Book 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) "Allocated on the basis of sales dollars. Saved Total $ 926,000 469,000 Dirt Bikes $ 262,000 120,000 457,000 142,000 Mountain Bikes $ 407,000 197,000 210,000 Racing Bikes $ 257,000 152,000 105,000 68,900 8,200 40,600 20,100 44,200 20,700 8,000 15,500 114,500 40,700 38,100. 35,700 185,200 52,400 81,400 51,400 412,800 122,000 168,100 122,700 $ 44,200 $ 20,000 $ 41,900 $ (17,700) Help Save & Exit Print 0 erences 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 Should the production and sale of racing bikes be discontinued? Yes No Check my B 15 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. Book Required 1 Required 2 Required 3 Hint Print ferences 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. Contribution margin (loss) Traceable fixed expenses Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) Totals Dirt Bikes Mountain Bikes Racing Bikes: 0 0 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ O