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:

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 Bikes Total Bikes Bikes 933,000 $267,000 407,000 $ 259,000 153,000 Sales Variable manufacturing and selling 466,000 112,000 201,000 expenseS Contribution margin Fixed expenses: 467,000 155,000 206,000 106,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 20,400 15,900 35,900 51,800 124,000 $52,500 32,000 38,500 (18,000) 40,200 7,500 38,400 81,400 414,500 123,000 167,500 8,200 44,300 20,900 114,800 40,500 53,400 68,800 186,600 Total fixed expenses Net operating income (loss) 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 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: 0 0 0 0 Total traceable fixed expenses Product line segment margin (loss) 0 0 0 0 0 Net operating income (loss) K Required 2