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: Che 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) "Allocated on the basis of sales dollars. Total $ 927,000 460,000 Dirt Bikes $270,000 Mountain Bikes $ 402,000 Racing Bikes $ 255,000 114,000 467,000 156,000 191,000 211,000 155,000 100,000 70,100 8,900 40,600 20,600 43,900 21,000 7,600 15,300 114,600 40,300 38,000 35,500 185,400 54,000 80,400 414,000 124,200 167,400 $ 53,000 $ 31,800 $ 43,600 51,000 122,400 $ (22,400) 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? Should the production and sale of racing bikes be discontinued? O Yes No Prepare a properly formatted segmented income statement that would be more useful to management in assessin profitability of the various product lines. Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) Totals Dirt Bikes Mountain Bikes Racing Bikes < Required 2