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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 Bikes $261,000 118,000 Mountain Bikes $ 401,000 205,000 196,000 Racing Bikes $ 256,000 159,000 97,000 143,000 Total Sales $ 918,000 Variable manufacturing and selling expenses 482,000 Contribution margin 436,000 Fixed expenses: Advertising, traceable 69,600 Depreciation of special equipment 43, 400 Salaries of product-line managers 114, 300 Allocated common fixed expenses* 183, 600 Total fixed expenses 410, 900 Net operating income (loss) $ 25, 100 8,600 21,000 40, 800 52,200 122, 600 20, 400 40, 700 7,100 38, 300 80, 200 166, 300 29, 700 20, 300 15, 300 35, 200 51, 200 122,000 $ (25, 000) *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?

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