2 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: 2 points Total $ 926,000 463,000 463,000 Dirt Bikes $ 267,000 110,000 157,000 Mountain Bikes $ 405,000 200,000 205,000 Racing Bikes $ 254,000 153,000 101,000 eBook Sales Variable manufacturing and selling expenses Contribution margin Pixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) Hint 70, 100 43,700 116,200 185,200 415, 200 $ 47,800 8,700 21,000 41,000 53,400 124,100 $ 32,900 40,600 7,300 38,400 81,000 167, 300 $ 37,700 20,800 15,400 36,800 50,800 123,800 $ (22,800) Print References *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