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 $ 921,000 482,000 439,000 Dirt Bikes $ 264,000 119,000 145,000 Mountain Bikes $ 404,088 206,000 198,000 Racing Bikes $ 253,000 157,000 96, eee 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) 69,600 43,900 115,700 184,200 413,400 $ 25,600 9,000 20,700 40,500 52,808 123,000 $ 22,000 40,500 7,500 38,500 80,800 167,300 $ 30,700 20,100 15,700 36,700 50,600 123, 100 $ (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 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 la profitability of the various product lines. $ Totals Dirt Bikes Mountain Bikes Racing Bikes 921,000 $ 264.000 $ 404,000 $ 253,000 456,000 111,000 193,000 152,000 465,000 153,000 211,000 101,000 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) 68,900 43,800 114,400 8,200 20,700 40,200 69,100 83,900 $ 40,400 7,400 38,400 86,200 124,800 $ 20,300 15,700 35,800 71,800 29,200 227.100 237,900 $ Net operating income (loss) $ 237,900