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: 1.25 points Dirt Mountain Racing Total Bikes Bikes Bikes $ 914,000 $262,000 $ 401,000 $ 251,000 468,000 113,000 205,000 150,000 446,000 149,000 196,000 101,000 eBook 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) Hint 69,600 8,900 40,400 20,300 44,300 20,900 7,600 15,800 114,800 40,90038, 100 35,800 182,800 52,400 80,200 50,200 411,500 123,100 166,300 122,100 $ 34,500 $ 25,900 $ 29,700 $(21,100) References *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