1 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 $927,000 $263,000 $404,000 $260,000 Sales Variable manufacturing and selling 454,000 111,000 192,000 151,000 expenses Contribution margin Fixed expenses: 473,000 152,000 212,000 109,000 20,400 44,100 21,000 15,900 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses 70,000 8,900 40,700 7,200 114,600 40,300 38,500 185,400 52,600 BO,000 414,100 122,800 167,200 35,800 52,000 124,100 Net operating income (loss) $ 58,900 $ 29,200 $ 44,900 $(15,100) "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 33 ints Skipped eBook Hint Print References Mc 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 Contribution margin (loss) 0 0 0 Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) $