Hello

I need some help setting up these problems and figuring out where the formula's are coming from.

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 Sales $922, 000 $264, 000 $ 407,000 $ 251,000 Variable manufacturing and selling 467,000 197,000 159,000 expenses 111, 000 Contribution margin 455,000 153,000 210,000 92,000 Fixed expenses: Advertising, traceable 69,600 8, 300 40,500 20,800 Depreciation of special equipment 43, 100 20,300 7,200 15,600 Salaries of product-line managers 115,900 40,300 38, 800 36,800 Allocated common fixed expenses* 184, 400 52, 800 81, 400 50,200 Total fixed expenses 413,000 121, 700 167,900 123, 400 Net operating income (loss) $ 42,000 $ 31,300 42, 100 $ (31, 400) `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? Financial (disadvantage) per quarterThe 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 Bike Bikes Bikes Sales $ 922, 000 $264, 000 $ 407,000 $ 251,000 Variable manufacturing and selling expenses 467,000 111, 000 197,000 159,000 Contribution margin 455,000 153,000 210,000 92,000 Fixed expenses: Advertising, traceable 69,600 8,300 10,500 20,800 Depreciation of special equipment 43, 100 20,300 7, 200 15, 600 Salaries of product-line managers 115,900 40, 300 38, 800 36, 800 Allocated common fixed expenses* 184, 400 52, 800 81 , 400 50,200 Total fixed expenses 413,000 121,700 167,900 123, 400 Net operating income (loss) $ 42,000 $ 31, 300 $ 42, 100 $(31, 400) `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 0 0 Traceable fixed expenses: Advertising Depreciation of special equipment Salaries of the product line managers Total traceable fixed expenses 0 0 0 Product line segment margin (loss) o $ o $ o $ Common fixed expenses Net operating income (loss) $ 0