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 $ 917,000 476,000 441,000 $ 263,000 112,000 151,000 Mountain Bikes $ 403,000 206,000 Racing Bikes $ 251,000 158,000 197,000 93,000 70,300 8,800 40,700 20,800 43,400 20,500 7,500 15,400 113,600 40,600 38,000 35,000 183,400 52,600 80,600 50,200 410,700 122,500 166,800 121,400 $ 30,300 $ 28,500 $ 30,200 $ (28,400) Management is concerned about the continued losges 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? Financial advantage (disadvantage) per quarter Financial advantage per quarter Required 2 > 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 $ 917,000 476,000 $ 263,000 Mountain Bikes $ 403,000 Racing Bikes $ 251,000 441,000 112,000 151,000 206,000 158,000 197,000 93,000 70,300 8,800 40,700 20,800 43,400 20,500 7,500 15,400 113,600 40,600 38,000 35,000 183,400 52,600 80,600 50,200 410,700 122,500 166,800 121,400 $ 30,300 $ 28,500 $ 30,200 $ (28,400) 25 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 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. 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 < Required 2 Required 3> 0