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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

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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. Dirt Mountain Racing Total Bikes Bike Diken $934,000 $265.000 $ 409.000 $ 260,000 472.000 115,000 200,000 157,000 162,000 150,000 202.000 103.000 Sales Variable manufacturing and selling expenses Contribution margin Tixed expenses Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Met operating Income (los) 70,900 8.900 41.000 21.000 43,700 20,600 7,200 15.900 114,500 40,300 30,000 35,400 286,000 53,000 81300 52.000 415.900 122/200 168,000 124.300 $ 46,100 $ 27,200 $ 40,200 $21,300) "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 rosale 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 property 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 htlant Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? OYes ONO 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 Bikos Contribution margin (loss) Traceable fixed expenses Total traceable foxed expenses Product line segment margin (0) Net operating income (los)

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