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 $ 920,000 $ 262,000 $ 406,000 $ 252,000 Variable manufacturing and selling expenses 477,000 112,000 206,000 159,000 Contribution margin 443,000 150,000 200,000 93,000 Fixed expenses: Advertising, traceable 69,300 8,800 40,200 20,300 Depreciation of special equipment 43,500 20,500 7,600 15,400 Salaries of product-line managers 115,100 40,200 38,600 36,300 Allocated common fixed expenses* 184,000 52,400 81,200 50,400 Total fixed expenses 411,900 121,900 167,600 122,400 Net operating income (loss) $ 31,100 $ 28,100 $ 32,400 $ (29,400) *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. Next Visit question mapQuestion 1 of 7 Total1 of 7 Prev