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: 75 Dirt Mountain Racing oints Total Bikes Bikes Bikes $ $ Sales 922, 000 262, 000 404, 000 256, 000 Variable manufacturing and selling 481,000 118, 000 206,000 157 , 000 eBook expenses Contribution margin 441, 000 144, 000 198,000 99 , 000 Fixed expenses : Hint Advertising, traceable 69, 800 8, 700 40 , 700 20, 400 Depreciation of special equipment 44, 100 20, 600 7, 700 15, 800 Salaries of product-line managers 114, 200 40, 600 38 , 600 35, 000 Allocated common fixed expenses* 184, 400 52, 400 80, 800 51, 200 Total fixed expenses 412, 500 122, 300 167 , 800 122, 400 Net operating income (loss) 28, 500 21, 700 30,200 (23, 400) *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 Required Required 2 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 Racing Bikes Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses 0 Product line segment margin (loss) o$ 0$ 0 $ Net operating income (loss) $ 0