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Help Save & Exit Chech 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. Dirt Mountain Racing Total Bikes Bikes Bikes $ 933,000 $269,000 $ 406,000 $ 258,000 476,000 112,000 209,000 155,000 457,000 157,000 197,000 103,000 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) 69,300 8,800 40,300 20,200 43,900 20,300 7,800 15,800 113,800 40,500 38,100 35, 200 186,600 53,800 81,200 51,600 413,600 123, 400 167,400 122,800 $ 43, 400 $ 33,600 $ 29,600 $(19,800) *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. nces 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. en hy entering your answers in the tabs below

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