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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 Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 918,000 $ 262,000 $ 403,000 $ 253,000 Variable manufacturing and selling expenses 463,000 112,000 194,000 157,000 Contribution margin 455,000 150,000 209,000 96,000 Fixed expenses: Advertising, traceable 69,000 8,100 40,400 20,500 Depreciation of special equipment 43,200 20, 100 7,380 15,800 Salaries of product-line managers 114,900 40,500 38,200 36,200 Allocated common fixed expenses 183,600 52,400 80,600 50,600 Total fixed expenses 410,700 121, 100 166,580 123, 100 Net operating income (loss) $ 44,300 $ 28,900 $ 42,500 $ (27.100) *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. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required Required 2 > Required 1 Required 2 Required 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. Totals Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 0 Contribution margin (loss) Traceable fixed expenses 0 0 0 Total traceable foed expenses Product line segment margin (1058) olo 0 S 0 $ 0 s 0 Net operating income (loss) $ 0

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