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 Mountain Bikes Sales $ 923,000. Variable manufacturing and selling expenses Dirt Bikes $ 268,000 118,000 150,000 Racing Bikes $ 252,000 157,000 95,000 $ 403,000 197,000 472,000 Contribution margin Fixed expenses: 451,000 206,000 Advertising, traceable: 69,200 8,800 40,100 20,300 43,800 20,400 7,600 15,800 114,600 40,500 Depreciation of special equipment. Salaries of product-line managers Allocated common fixed expenses" Total fixed expenses 38,800 35,300 184,600 53,600 80,600 50,400 412, 200 123,300 167,100 121,800 Net operating income (loss) $ 38,800 $ 26,700 $ 38,900 $ (26,800) "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. Complete this question by entering your answers in the tabs below. nerad 2 Allocated common fixed expenses Total fixed expenses 184,600 80,600 53,600 123,300 50,400 121,800 167,100 412,200 $ 38,800 Net operating income (loss) $ 26,700 $ 38,900 $ (26,800) "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. 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? Required 2 >
