05 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. 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) "Allocated on the basis of sales dollars. Total $ 922,000 474,000 448,000 Dirt Bikes $ 262,000 114,000 148,000 Mountain Bikes $ 402,000 205,000 Racing Bikes $ 258,000 155,000 197,000 103,000 69,800 8,600 40,900 20,300 43,800 20,900 7,500 15,400 116,000 40,700 38,400 36,900 184,400 414,000 52,400 122,600 80,400 167,200 51,600 124,200 $ 34,000 $ 25,400 $ 29,800 $ (21,200) 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 11 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?