The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 921,000 $ 263,000 $ 403,000 $ 255,000 Variable manufacturing and selling expenses 461,000 112,000 192,000 157,000 Contribution margin 460,000 151,000 211,000 98,000 Fixed expenses: Advertising, traceable 69,900 8,900 40,100 20,900 Depreciation of special equipment 42,700 20,200 7,200 15,300 Salaries of product-line managers 114,700 40,500 38,100 36,100 Allocated common fixed expenses* 184,200 52,600 80,600 51,000 Total fixed expenses 411,500 122,200 166,000 123,300 Net operating income (loss) $ 48,500 $ 28,800 $ 45,000 $ (25,300) *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. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Complete this question by entering your answers in the tabs below. Should the production and sale of racing bikes be discontinued? 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