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 $ 923,000 473,000 450,000 Dirt Bikes $ 263,000 119,000 144,000 Mountain Bikes $ 404,000 198.000 206,000 Racing Dikes $ 256,000 156,000 100,000 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses Advertising, traceable Depreciation of special equipment salaries of product-line managers Allocated coon fixed expenses Total fixed expenses Het operating income (los) 69,400 43,600 114,300 184,500 411.900 $ 38,100 2,700 20,300 40,300 52,600 121.900 $ 22,100 40,500 8,000 38,500 80,000 167,800 $ 30,200 20,200 15,300 35,500 51,200 122,200 $ (22,200) ces "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 bikos 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? Book Management is concerned about the continued losses shown by the racing bikes and wants a recommendation the line should be discontinued. The special equipment used to produce racing bikes has no resale value and do 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 assess profitability of the various product lines. Hint Complete this question by entering your answers in the tabs below. Print forences Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes ONO (Required 1 Required 3 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a properly formatted segmented Income statement that would be more useful to management in assessing the long profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: 0 0 0 Total traceable foxed expenses Product line segment margin (loss) 0 0 0 0 0 $ 0 S 0 s 0 Net operating income (loss)
