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: 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 (loss) Total $ 932,000 484,000 448,000 69,100 43,800 114,300 186,400 413,600 $ 34,400 Dirt Bikes $ 264,000 117,000 147,000 Mountain Bikes $ 408,000 209,000 199,000 Complete this question by entering your answers in the tabs below. Racing Bikes $ 260,000 158,000 102,000 8,200 40,200 20,700 20,200 7,800 15,800 40,200 38,900 35,200 52,800 81,600 52,000 121,400 168,500 123,700 $ 25,600 $ 30,500 $ (21,700) *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.

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: "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 financlal 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 stotement that would be more useful to management in assessing the long-run profitability of the vorious product lines. Complete this question by entering your answers in the tabs below