1 The Regal Cyde 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 $924,000 $267,000 $ 404,000 $ 253,000 472, 119,000 196,000 157.000 452.000 148.000 208 96,000 Sook 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) 70,000 8,600 41,000 20,800 43.000 20.500 7.300 15,200 115,00 81.000 1,500 36,500 184, 100 53,400 1,500 se.co 616,000 1213.00 167/200 123 109 $ 38,000 5 24.500 340.000 $(27.100) "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 velue 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 property formatted segmented income statement that would be more useful to management in assessing the long run profitability of the various product lines