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 Dirt Bikes Mountain Bikes $ 917,000 470,000 447,000 $ 263,000 119,000 144,000 $ 403,000 198,000 205,000 Racing Bikes $ 251,000 153,000 98,000 69,200 8,200 40,600 20,400 44,100 21,000 7,200 15,900 115,200 40,200 38,100 36,900 183,400 52,600 80,600 50,200 411,900 122,000 166,500 123,400 $ 35,100 $ 22,000 $ 38,500 $ (25,400) 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: 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 $ 470,000 917,000 $ 263,000 119,000 $ 403,000 198,000 $ 251,000 153,000 447,000 144,000 205,000 98,000 69,200 8.200 40,600 20,400 44,100 21,000 7,200 15,900 115,200 40,200 38,100 36,900 228,500 69.400 85,900 73,200 218,500 $ 74,600 $ 119.100 $ 24,800 $ 218,500 < Required 2 Required 3 >