e Regal cyce company manuidctures tee types VI DIY-URL Dike, a mountail Dike, nu a Tdcing Like Udid on dies and expenses for the past quarter follow. Total $ 927, eee 464, 463,000 Dirt Bikes $ 269,000 116,000 153,eee Mountain Bikes $ 400,000 190,000 21 , Racing Bikes $ 258,000 158, eee 108, eee 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) 70,600 43,800 114,900 185,480 414,700 $ 48,300 9, eee 21, eee 40,800 53,880 124,600 $ 28,400 40,888 7,200 38, 2ee 80,000 166,280 $ 43,800 20, Bee 15,6ee 35,9ee 51,600 123,9ee $ 23,900) "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