Question: I do not understand how to complete the question! The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a

I do not understand how to complete the question!

I do not understand how to complete the question! The Regal CycleCompany manufactures three types of bicycles-a dirt bike, a mountain bike, and

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 Total 460,000 13,000 19 465,000 157,000 Mountain Racing Bikes 405,000 S 250,000 113,000 197,000 150,000 Bikes Sales S 925,000 S 270,000 Variable manufacturing and selling expenses Contribution margin Fixed expenses: 208,000 100,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 69,800 43,300 113,900 185,000 8,400 20,500 40,100 54,000 40,700 7,400 38,700 81,000 20,700 15,400 35,100 50,000 Total fixed expense:s 412,000 123,000 167,800 121,200 Net operating income (loss) S 53,000 S 34,000 S 40,200 S (21,200) 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: 1a. What is the impact on net operating income by discontinuing racing bikes? (Decreases should be indicated by a minus sign.) Difference: Net Operating Income Total If Current Total Racing Bikes Increase or Decrease) Are Dropped 925,000 Sales Variable manufacturing and selling expenses Contribution margin (loss) Fixed expenses: 925,000 0 0 Advertising, traceable Depreciation on special equipment Salaries of product managers Common allocated costs Total fixed expenses 0 Net operating income (loss) 925,000 S 0 S

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