358 nces 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 3 923,000 472,000 Dirt Bikes $ 266,000 114,000 Mountain Bikes $404,000 Racing Bikes $253,000 204,000 154,000 451,000 152,000 200,000 99,000 69,300 8,200 40,400 20,700 42,600 20,100 7,300 15,200 115,500 40,200 38,000 16,700 184,600 $3,200 50,000 50,600 413,000 121,200 167-100 123,200 $ 39,000 $ 30,300 $ 32,900 $ (34,200) 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