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 Sales $ 924,090 $264,600 $ 407,909 $ 253,090 Variable manufacturing and selling expenses 467,600 119,620 191,060 157,808 Contribution margin 457,600 145,606 216,060 96,808 Fixed expenses: Advertising, traceable 70, 200 8, 780 40,580 20, 708 Depreciation of special equipment 43,209 20,609 7,100 15,500 Salaries of product-line managers 114,500 40,600 36,200 36,300 Allocated common fixed expenses" 184, Bee 52,800 81,480 50,608 Total fixed expenses 412.760 122, 180 167-580 123,108 Net operating income (loss) $ 44,300 $ 22,900 46,500 $ (27,100) `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 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-ru profitability of the various product lines. 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 Contribution margin (loss) Traceable fixed expenses Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)