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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: Dirt Mountain Racing Bikes Total Bikes Bikes $925,000 $266,000 408,000 251,000 156,000 95,000 Sales Variable manufacturing and selling 464,000 111,000 197,000 expenseS Contribution margin Fixed expenses: 461,000 155, 000 211,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 40,600 7,300 38,800 81,600 412,700 122,300 168,300 69,300 20,300 15,300 36,300 50,200 122,100 32,700 42,700 $(27,100) 8,400 43,100 20,500 115, 300 40,200 185,000 53,200 Total fixed expenses Net operating income (loss) 48,300 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 1Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 3 Required 1Required 2 Should the production and sale of racing bikes be discontinued? Yes 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 Contribution margin (loss) Traceable fixed expenses 0 0 0 0 Total traceable fixed expenses 0 0 0 0 0 0 Net operating income (loss)

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