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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 Total $924,000 480,000 444,000 Dirt Bikes $ 270,000 114,000 156,000 Mountain Bikes $ 484,900 210,000 194,000 Racing Bikes $ 250,000 156,000 94.800 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 (los) 69, 100 43,800 113,800 184,800 431.500 $ 32,500 8,300 28,500 40,600 54,000 123,482 $ 32,600 40,600 7,500 38,000 86,800 167 200 $ 26,800 20.200 15,500 35,200 50,000 120,900 $(26,900) "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. 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. 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 Required 2 > Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-rur profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 0 + Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses Advertising, traceable Depreciation of special equipment Salaries of the product line managers Total traceable fixed expenses Product line segment margin (loss) Common fixed expenses Netoperating income (loss) 0 0 0 0 00 0 s 0 $ 0 $ 0 0

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