The Regal Cycle Company manufactures three types of bicycles-ma dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow. bed Sales Variable manutacturing and selling expenses Contribution margin Yixed expenses Advertising, traceable Depreciation of special equipment salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating Income (loss) Dirt Mountain Racing Total Bikea Baked kee $921,000 $265,000 $402,000 $ 254,000 477.000 114.000 200,000 155,000 FOOOOOOOOO 000 69,600 6,500 40.600 20,500 43,200 20.200 7.800 15.200 114,309 40,400 38.400 35.500 184,200 1000 0400 50.000 O TELO 1200 12200W 32,700 S 20.900 26.000 $723,000) OK ant rences "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) The Regal Cycle Company manufactures three types of bicycles-ma dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow. bed Sales Variable manutacturing and selling expenses Contribution margin Yixed expenses Advertising, traceable Depreciation of special equipment salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating Income (loss) Dirt Mountain Racing Total Bikea Baked kee $921,000 $265,000 $402,000 $ 254,000 477.000 114.000 200,000 155,000 FOOOOOOOOO 000 69,600 6,500 40.600 20,500 43,200 20.200 7.800 15.200 114,309 40,400 38.400 35.500 184,200 1000 0400 50.000 O TELO 1200 12200W 32,700 S 20.900 26.000 $723,000) OK ant rences "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)
