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: 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 $ 928,000 473,000 455,000 Dirt Bikes $ 268,000 119,000 149,000 Mountain Bikes $ 410,000 198,000 Racing Bikes $ 250,000 156,000 212,000 94,000 69,300 8,800 40,100 28,400 44,000 28,500 7,800 15,700 115,100 48,300 38,600 36,200 185,600 53,600 82,000 50,000 414,000 123,200 168,500 122,300 $ 41,000 $ 25,800 $ 43,500 $ (28,300) 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. Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) Totale Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 0 0 0 $ 0 $ 0 $ 0 S 0 < Required 2 Required 3 >