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 $ 928,000 453,000 Dirt Bikes $ 264,000 112,000 Mountain Bikes $ 408,000 191,000 Racing Bikes $ 256,000 150,000 475,000 152,000 217,000 106,000 69,800 8,800 40,600 20,400 43,600 20,600 7,300 15,700 114,800 40,600 38,400 35,800 185,600 52,800 81,600 51,200 413,800 122,800 167,900 123,100 $ 61,200 $ 29,200 $ 49,100 $ (17,100) tes 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 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 1 Required 2> 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) Totals Dirt Bikes Mountain Bikes Racing Bikes $ 928,000 453,000 475,000 0 0 0 69,800 43,600 114,800 228,200 0 0 0 246,800 $ 0 $ 0 $ 0 185,600 $ 61,200 < Required 2 Required 3 >