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The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

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: Total $ 925,000 Sales Dirt Bikes $ 264,000 111,000 153,000 Mountain Bikes $ 403,000 208,000 Racing Bikes $ 258,000 157,000 476,000 449,000 Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable 195,000 101,000 70,000 8,300 40,800 20,900 42,600 20,200 7,200 15,200 114,500 40,300 38,700 35,500 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses 185,000 52,800 80,600 51,600 412, 100 121,600 167,300 123,200 Net operating income (loss) $ 36,900 $ 31,400 $ 27,700 $ (22,200) *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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes No Complete this question by entering your answers in the tabs below. 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. Dirt Bikes Mountain Bikes Racing Bikes Totals Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) Required 3

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