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1 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: 10 points Dirt Mountain Racing Total Bikes Bikes Bikes $ 928,000 $267,000 $ 404,000 $ 257,000 471,000 120,000 201,000 150,000 457,000 147,000 203,000 107,000 eBook 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) 69,700 43,700 115,700 185,600 414,700 $ 42,300 8,400 20,600 40,300 53,400 122,700 $ 24,300 40,600 20,700 7,300 15,800 38,400 37,000 80,800 51,400 167,100 124,900 35,900 $(17,900) Hint Print *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. References 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. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter

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