The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales am 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 Dirt Bikes $ 922,000 483,000 $ 269,000 118,000 Mountain Bikes $ 403,000 Racing Bikes 439,000 151,000 208,000 195,000 $ 250,000 157,000 93,000 69,600 8,900 40,500 20,200 44,000 20,600 7,800 15,600 115,300 40,800 39,000 35,500 184,400 53,800 80,600 50,000 413,300 124,100 167,900 121,300 $ 25,700 $ 26,900 $ 27,100 $ (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 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? < Prev 2 of 7 Next >