The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 927,000 $ 265,000 $ 406,000 $ 256,000 Variable manufacturing and selling expenses 459,000 116,000 190,000 153,000 Contribution margin 468,000 149,000 216,000 103,000 Fixed expenses: Advertising, traceable 70,000 8,500 40,600 20,900 Depreciation of special equipment 43,900 20,400 7,800 15,700 Salaries of product-line managers 115,000 40,600 38,100 36,300 Allocated common fixed expenses* 185,400 53,000 81,200 51,200 Total fixed expenses 414,300 122,500 167,700 124,100 Net operating income (loss) $ 53,700 $ 26,500 $ 48,300 $ (21,100) *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.

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 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter Required 1 Required 2 Required 3 Prepare a properly formatted segmented income statement that would be more useful to management in asses run profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 0 Contribution margin (loss) Traceable fixed expenses: 0 0 0 Total traceable fixed expenses Product line segment margin (loss) 0 % 0 % 0 % 0 Net operating income (loss) $ 0