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 Dirt Bikes 472,000 $ 266,000 117,000 Mountain Bikes $409,000 Racing Bikes $254,000 196,000 159,000 457,000 149,000 213,000 95,000 70,500 8,900 41,000 20,600 42,400 20,100 7,200 15,100 115,000 40,300 38,900 35,800 185,800 413,700 53,200 122,500 #1,800 50,800 168,900 122,300 $ 43,300 $ 26,500 $44,100 (27,300) 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) $ 929,000 "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. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Prepare a properly formatted segmented income statement that would be more useful to management in assess profitability of the various product lines. Contribution margin (loss) Traceable fixed expenses Total traceable fixed expenses + Product line segment margin (loss) Net operating income (loss) $ Totals Dirt Bikes Mountain Bikes Racing Bikes 0 0 0 S 0 $