Item1 10 points Item Skipped eBook Hint Print References Check my work Check My Work button is now enabledItem 1 Item 1 10 points Item Skipped The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 930,000 $ 263,000 $ 408,000 $ 259,000 Variable manufacturing and selling expenses 470,000 116,000 195,000 159,000 Contribution margin 460,000 147,000 213,000 100,000 Fixed expenses: Advertising, traceable 69,300 8,600 40,500 20,200 Depreciation of special equipment 44,400 20,700 7,800 15,900 Salaries of product-line managers 114,300 40,000 38,700 35,600 Allocated common fixed expenses* 186,000 52,600 81,600 51,800 Total fixed expenses 414,000 121,900 168,600 123,500 Net operating income (loss) $ 46,000 $ 25,100 $ 44,400 $ (23,500) *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.