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 Total Bikes Bikes Bikes $926,000 $262,00 $ 406,000 5 258,000 481,000 119,00 204,000 158,000 445,000 143,800 202000 100.000 Sales Variable manufacturing and selling expenses Contribution marki Fixed expenses Advertising, traceable Depreciation of special equipment Salaries of product line managers Allocated connon fixed expenses Total fixed expenses Net operating income (loss) 70,000 8,700 42,900 20,200 115,000 40,00 185,200 52 400 413 100 122. 100 $ 31,900 $20.900 40,300 21,000 7,400 15,300 38,400 35,800 81,200 $1,600 167 200 123,700 34,200 $(23,780) "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. Prey 1 of 2 Next > O i 3 2 to search TAKING YOU TO A NEW REALITY