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: Total Dirt Bikes Sales $920,000 $ 261,000 Mountain Bikes $ 404,000 Variable manufacturing and selling expenses 472,000 114,000 207,000 Contribution margin 448,000 147,000 197,000 Racing Bikes $ 255,000 151,000 104,000 Fixed expenses: Advertising, traceable 69,400 8,100 41,000 20,300 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses. Total fixed expenses Net operating income (loss) 43,900 20,400 7,900 15,600 113,800 40,500 38,100 35,200 184,000 52,200 80,800 51,000 411,100 121,200 167,800 122,100 $ 36,900 $ 25,800 $ 29,200 $ (18,100) "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. 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 profitability of the various product lines. Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: Depreciation of special equipment Salaries of the product line managers Common fixed expenses Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) Totals Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0