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:

$\backslash$table$[[,$Mountain,$],[$Sales$,$Total,Dirt Bikes,Bikes,Racing Bikes,$],[$Variable manufacturing and selling expenses,$$920,000,$$$263,000,$$$405,000,$$$252,000,],[$Contribution margin,$468,000,111,000,203,000,154,000,],[$Fixed expenses:,$452,000,152,000,202,000,98,000,],[,$ Advertising, traceable,,$68,700,8,100,40,200,20,400],[$Depreciation of special equipment,$43,400,20,900,7,200,15,300,],[$Salaries of product$-$line managers,$115,200,40,500,38,200,36,500,],[$Allocated common fixed expenses$*,184,000,52,600,81,000,50,400,],[$Total fixed expenses,$411,300,122,100,166,600,122,600,],[$Net operating income $($loss$),$$$40,700,$$$29,900,$$$35,400,$$$(24,600),]]$

$*$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:

What is the financial advantage $($disadvantage$)$ per quarter of discontinuing the Racing Bikes?

Should the production and sale of racing bikes be discontinued?

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.

Required $1$

What is the financial advantage $($disadvantage$)$ per quarter of discontinuing the Racing Bikes?

Required $1$

Required $3$

Should the production and sale of racing bikes be discontinued?

$\backslash$table$[[$Yes$],[$No$]]$

Required $1$

Required $3$

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.

$\backslash$table$[[,$Totals,Dirt Bikes,Mountain Bikes,Racing Bikes$],[,,,,],[$Contribution margin $($loss$),,,,],[$Traceable fixed expenses:,,,,$],[,,,,],[,,,,],[$Total traceable fixed expenses,,,,$],[$Product line segment margin $($loss$),,,,],[,,,,],[$Net operating income $($loss$),,,,]]$