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 446,000 Dirt Bikes $ 265,000 112,000 153,000 Mountain Bikes $ 406,000 210,000 Racing Bikes $ 253,000 156,000 196,000 97,000 70,100 9,000 40,800 20,300 43,600 20,900 7,100 15,600 114,900 40,800 38,100 36,000 184,800 53,000 81,200 50,600 413,400 123,700 167,200 122,500 $ 32,600 $ 29,300 $ 28,800 $ (25,500) 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 $ 924,000 478,000 Net operating income (loss) *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 long-run profitability of the various product lines. Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses: Sales Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) Totals $ Dirt Bikes 924,000 $ 265,000 $ 378,000 84,000 Mountain Bikes Racing Bikes 406,000 $ 253,000 546,000 181,000 168,000 238,000 126,000 127,000 0 0 0 0 546,000 $ 181,000 $ 238,000 $ 127,000 $ 546,000 < Required 2 Required 3 >