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 $ 924,000 $268,000 $403,000 $ 253,000 468,000 112,000 201,000 155,000 456,000 156,000 202.000 98,000 Yt 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 incomo (loss) nt 69,800 8,200 40.800 20,800 43,400 20,600 7,200 15,600 115,500 40,900 38,900 35,700 184,800 53.600 80,600 50,600 413.500 123.300 167.500 122,700 $ 42,500 $ 32,700 $ 34,500 $(24.700) onces "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 Total tixed expenses Bet operating income (los) 423,50 123,300 162.500 122.700 $ 42,500 $ 32,700 $ 34,500 $(24,700) "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 property 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 Meduled Required 2 > Required 1 Required 2 Required 3 Prepare a properly formatted segmented income statement that would be more useful to management in a run profitability of the various product lines. $ 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 foxed expenses Net operating income (loss) Totals Dirt Bikes Mountain Bikes Racing Bikes 924,000 $ 268,000 $ 403,000 $ 253,000 468,000 112,000 201,000 155,000 456,000 156,000 202,000 98,000 + 69,800 8,200 40,800 20,800 43,400 20,600 7,200 15,600 115,500 40.900 38.900 35,700 228,700 69,700 86,900 72,100 227,300 $ 86,300 $ 115,100 $ 25.900 $ 227,300