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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 Total Bikes Bikes Bikes $ 928, Bee $267,899 $ 484, see $ 257,080 471, eee 120,899 201, 8ee 158,888 457, Bee 147,899 293,eee 107,080 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 8,488 43,700 20,600 115,700 40,300 185,600 53,499 414, 782 122,709 $ 42,300 $ 24,300 $ 40,600 20,798 7,300 15,800 38,400 37,000 80,800 51,48e 167, 100 124,900 35,900 $(17,908) *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 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 Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: 0 0 0 0 0 ol 0 S 0 s 0 $ 0 Total traceable fixed expenses Product line segment margin (loss) Salaries of the product line managers Net operating income (loss) s 0

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