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 $ 920,000 $267,000 $ 402,000 $ 251,000 471,000 112,000 205,000 154,000 449,000 155,000 197,000 97,000 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 8,300 40,800 20,600 44,100 20,500 7,700 15,900 114,000 40,800 38,000 35,200 184,000 53,400 80,400 50,200 411,800 123,000 166,900 121,900 $ 37,200 $ 32,000 $ 30,100 $(24,900) *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 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. Answer is not complete. 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 a run profitability of the various product lines. Totals $ 920,000 471,000 449,000 Dirt Bikes $ 267,000 112,000 155,000 Mountain Bikes $ 402.000 205,000 197,000 Racing Bikes $ 251,000 154,000 97,000 Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of the product line managers Total traceable fixed expenses Product line segment margin (loss) Common fixed expenses Net operating income (loss) 69,700 44,100 114,000 227,800 221,200 8,300 20,500 40,800 69,600 85,400 40,800 7,700 38,000 86,500 110,500 20,600 15,900 35,200 71,700 25,300 $ $ $ 221,200