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 Sales $921,000 $263,000 $ 404,000 $ 254,000 Variable manufacturing and selling expenses 475,000 110,000 201,000 160,000 Contribution margin 446,000 149,000 20,000 94,000 Fixed expenses: Advertising, traceable 69,000 8,400 40,500 20,100 Depreciation of special equipment 43,300 20,200 7,480 15,700 Salaries of product-line managers 115, 180 40,100 38,100 36,900 Allocated common fixed expenses 184,200 52,600 80.800 50, 800 Total fixed expenses 411.500 12130 166,800 123,500 Net operating income (loss) $ 34,400 5 27,7095 36,200 $(29,500) "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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes No D Prey 1 of 6 Next >