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 $ 924,000 $263,000 $ 409,000 $ 252,000 472,000 118,000 204,000 150,000 452,000 145,000 205,000 102,000 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) 70,700 9,000 40,700 21,000 44,500 21,000 7,900 15,600 113,900 40,700 38,100 35, 100 184,800 52,600 81,800 50,400 413,900 123,300 168,500 122,100 $ 38,100 $ 21,700 $ 36,500 $(20,100) *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. Requi Financial (disadvantage) per quarter Financial advantage per quarter Should the production and sale of racing bikes be discontinued? OYes ONO Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses 0 0 0 0