The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, expenses for the past quarter follow Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 921,000 $ 269,000 $ 401,000 $ 251,000 Variable manufacturing and selling expenses 484,000 118.000 206,000 160,000 Contribution margin 437,600 151,000 195,000 91,000 Fixed expenses: Advertising. traceable 69,300 8,200 40,500 20,600 Depreciation of special equipment 44,700 20,800 8,000 15,900 Salaries of product-line managers 115,800 40,700 38,900 36,200 Allocated common fixed expenses 184,200 53,800 50,200 50,200 Total fixed expenses 414,000 123,500 167,600 122,900 Net operating income (loss) $ 23,000 $ 27,500 *$ 27,400 $ (31,900) *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 no 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 Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 1 Required 2 > Required 1 Required 2 Required 3 Should the producthin and sale of racing bikes be discontinu OYes No Prepare a properly formatted segmented income statement that would be more useful to management in assessing profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 Contribution margin (loss) Traceable fixed expenses 0 0 0 0 traceable fixed expenses Product line segment margin (loss) 0 0 $ $ 0 0 $ Net operating income (loss)