U 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: Racing Dirt Mountain Total Bikes Bikes Bikes $ 934,000 $270,000 $ 406,000 $ 258,888 470,000 112,000 208,000 150,000 464,000 158,000 198,000 108,000 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) 70,300 8,600 40,800 20,900 43,700 20,600 7,200 15,900 115,700 40,600 38,100 37,000 186,800 54,000 81,200 51,600 416,500 123,800 167, 300 125,400 $ 47,500 $ 34,200 $30,700 $(17,400) 35 "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. ement in asses int Complete this question by entering your answers in the tabs below. ences Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Required 2 >