Dirt Mountain Hacing Total Bikes Bikes $ 924,000 $266,00 $ 405,000 $253,000 472,000 117,000 197,00 158,00 452,000 149,00 288,000 95,000 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) 69,700 8,300 40,500 20,900 43,200 20,500 7,600 15,100 114,700 40,400 38,200 36,100 184,800 53,200 81,00 50,600 412,400 122,400 167,300 122,700 $ 39,600 $ 26,600 $ 40,700 $(27,700) "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