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: Mountain Total Dirt Bikes Bikes Racing Bikes $ $ Sales 921,000 262,000 401,000 258,000 Variable manufacturing and selling expenses 461,000 110,000 200 200,000 151,000 Contribution margin 460,000 152,000 201,000 107,000 Fixed expenses: Advertising, traceable 69,700 Depreciation of special 43,300 7,300 8,500 40,900 20,300 20,200 15,800 equipment Salaries of product-line 115,600 40,400 38,200 37,000 managers 184,200 52,400 412,800 80,200 121,500 166,600 124,700 51,600 Allocated common fixed expenses* Total fixed expenses Net operating income (loss) "Allocated on the basis of sales dollars. 7,200 $ 30,500 34,405 (17,700 $ 47,200 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 Required Required 2 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial advantage (disadvantage) per quarter Required 1 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: Total Sales 921,000 Dirt Bikes $ 262,000 401,000 Mountain Bikes Racing Bikes $ $ 258,000 Variable manufacturing and selling expenses 461,000 Contribution margin 110,000 200,000 460,000 152,000 201,000 151,000 107,000 Fixed expenses: Advertising, traceable 69,700 8,500 40,900 43,300 20,200 20,300 7,300 15,800 115,600 40,400 38,200 37,000 184,200 412,800 52,400 80,200 121,500 51,600 166,600 124,700 $ $ 34,400 (17,700) 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. $ 47,200 $ 30,500 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 Required Required 1 2 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) Mountain Racing Totals Dirt Bikes Bikes Bikes 0 0 0 0 0 0 0 $ 0 $ 0 $ Net operating income (loss) $