Check my work 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: 4 points Sales eBook Hint References 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) Total Dirt Bikes Mountain Bikes Racing Bikes $ 932,000 $263,000 $409,000 $ 260,000 470,000 112,000 199,000 159,000 462,000 151,000 210,000 101,000 69,700 43,800 8,300 20,500 40,500 20,900 7,900 15,400 113,700 40,100 38,200 35,400 186,400 413,600 52,600 121,500 81,800 52,000 168,400 123,700 $ 48,400 $ 29,500 $ 41,600 $(22,700) *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.