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 Total Bikes Bikes Bikes $923,000 $263,000 $409,000 $ 251,000 100 000 000 200 000 150 000 443,000 149,000 201,000 93,000 69,500 8,700 40,500 20,300 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) 43,800 20,800 7,500 15,500 114,700 40,700 38,400 35,600 184,600 52,600 81,800 50,200 412,600 122,800 168,200 121,600 $ 30,400 $ 26,200 $ 32,800 $(28,600) *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? 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 Total Bikes Bikes Bikes $923,000 $263,000 $409,000 $ 251,000 100 000 000 200 000 150 000 443,000 149,000 201,000 93,000 69,500 8,700 40,500 20,300 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) 43,800 20,800 7,500 15,500 114,700 40,700 38,400 35,600 184,600 52,600 81,800 50,200 412,600 122,800 168,200 121,600 $ 30,400 $ 26,200 $ 32,800 $(28,600) *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? 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. Totals Dirt Bikes Mountain Bikes Racing Bikes 0 Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) 0 $ 0 Net operating income (loss) $ 0