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 $ 927,000 $267,000 $ 403,000 $ 257,000 467,000 120,00 191,000 156,000 460,000 147,000 212,000 101,000 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) 69,700 43,800 115,700 185,400 414,600 45,400 8,900 20,800 40,800 53,400 123,900 $ 23,100 40,500 20,300 7,800 15,200 38,300 36,600 80,600 51,400 167,200 123,500 44,800 $(22,500) $ $ *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 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 Sales 0 0 0 0 Contribution margin (loss) Traceable fixed expenses: Common fixed expenses Advertising, traceable Depreciation of special equipment Total traceable fixed expenses Product line segment margin (loss) 0 0 $ 0 5 0 0 $ Net operating income (loss)