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ezto.mheducation.com A LTI Launch M Question 2 - CH 13 Homework - Connect Save Ex lomework i Saved Help Check 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: Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 928, 000 $ 264, 000 $ 408, 000 $ 256, 000 Variable manufacturing and selling expenses 469,000 112, 000 203, 000 154, 000 Contribution margin 459, 000 152, 000 205, 000 102 , 000 Fixed expenses: Advertising, traceable 69, 700 8, 500 41, 000 20, 200 Depreciation of special equipment 44, 500 20, 700 7, 800 16, 000 Salaries of product-line managers 113, 500 40 , 400 38, 000 35, 100 Allocated common fixed expenses* 185, 600 52 , 800 81, 600 51, 200 Total fixed expenses 413, 300 122, 400 168, 400 122, 500 Net operating income (loss) $ 45, 700 $ 29, 600 $ 36, 600 $ (20, 500) *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