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 Bikes Total $. 930,000 266,000 408,000 256,000 Bikes Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: 485,000 117,000 445,000 149,000 209,000 199,000 159,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 8,800 43,500 20,200 115,400 40,800 40,200 7,400 38,700 20,200 15,900 35,900 69,200 53,200 ,b 81,60000 186,000 51,200 Total fixed expenses Net operating income (loss) 167,900 31,100 414,100 123,000 123,200 $ 30,900 26,000 $(26,200) 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 Financial (disadvantage) per quarter Totals Dirt Bikes Mountain Bikes Racing Bikes Depreciation of special equipment Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)