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 Bikes Bikes $ 920,000 $261,000 $ 409,000 $ 250,000 480,000 117,000 206,000 157,000 440,000 144,000 203,000 93,000 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) 69,500 8,200 41,000 20,300 44,300 20,700 7,800 15,800 115,100 40,700 38,900 35,500 184,000 52,200 81,800 50,000 412,900 121,800 169,500 121,600 $ 27,100 $ 22,200 $ 33,500 $(28,600) *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? Financial (disadvantage) per quarter 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 Bikes Bikes Sales $920,000 $261,000 $409,000 $ 250,000 Variable manufacturing and 480,000 117,000 206,000 157,000 selling expenses Contribution margin 440,000 144,000 203,000 93,000 Fixed expenses: Advertising, 69,500 8,200 41,000 20,300 traceable Depreciation of + 44,300 20,700 7,800 15,800 special equipment Salaries of product-line 115,100 40,700 38,900 35,500 managers Allocated common 184,000 52,200 81,800 50,000 fixed expenses* Total fixed expenses 412,900 121,800 169,500 121,600 Net operating income $ 27,100 $ 22,200 $ 33,500 $ (28,600) (loss) *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 Required Required 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 Bikes Contribution margin (loss) Traceable fixed expenses: 0 0 0 Total traceable fixed expenses Product line segment margin (loss) 0 0 $ 0 0 $ 0 0 $ 0 0 Net operating income (loss) $ 0