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 $ 918,000 $ 262,000 $ 401,000 $ 255,000 Variable manufacturing and selling expenses 473,000 111,000 203,000 159,000 Contribution margin 445,000 151,000 198,000 96,000 Fixed expenses: Advertising, traceable 70,000 9,000 40,600 20,400 Depreciation of special equipment 43,600 20,500 7,200 15,900 Salaries of product-line managers 113,500 40,300 38,100 35,100 Allocated common fixed expenses* 183,600 52,400 80,200 51,000 Total fixed expenses 410,700 122,200 166,100 122,400 Net operating income (loss) $ 34,300 $ 28,800 $ 31,900 $ (26,400) *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.

Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 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 ONO Required 1 Required 2 Required 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. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)