Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line 68,800 8,400 40,200 20,200 44,000 20,400 7,800 15,800 116,400 41,000 36,600 38,800 managers Allocated common fixed 184,e00 52,600 80,600 58,880 expenses Total fixed expenses 413,200 $ 30,800 $ 24,600 $ 122,400 167,400 123,400 Net operating income (loss) 30,600 $(24,400) 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. 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 Dirt Mountain Racing Bikes 403,000 $ 254,000 Total Bikes Bikes Sales $920,000 $263,00e $ Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-1ine 476,000 116,000 205,000 155,000 444,000 147.000 198,000 99,000 68,800 8,400 40,200 20,200 44,000 20,400 7,800 15,800 116,400 41,000 38,800 36,600 managers Allocated common fixed expenses Total fixed expenses 184,000 52,600 80,600 5e,8 413,200 122,400 167,400 123,400 Net operating income (loss) $30,800 $ 24,600 $ 30,600 $(24,400) "Aliocated on the basis of sales dollars