The Regal Cycle Company manufactures three types of bicyclesa 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 $ 931,000 $270,000 $ 401,000 $ 260,000 482,000 114,000 209,000 159,000 449,000 156,000 192,000 101,000 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) 70,400 8,600 40,900 20,900 44,300 21,000 7,600 15,700 116,500 40,900 38,900 36,700 186,200 54,000 80, 200 52,000 417,400 124,500 167,600 125,300 $ 31,600 $ 31,500 $ 24,400 $(24,300) *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 long- run profitability of the various product lines. Totals Dirt Bikes Mountain Bikes $ 150,000 X $ Racing Bikes 60,000 X Sales $ 90,000 300,000 X $ 120,000 X 180,000 27,000 33,000 X 60,000 X 90,000 63,000 27,000 30,000 10,000 6,000 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) 14,000 9,000 X 6,000 8,000 X 23,000 X 35,000 12,000 13,000 10,000 24,000 88,000 28,000 36,000 92,000 $ 35.000 $ 54,000 $ 3,000 Common fixed expenses 60,000 X Net operating income (loss) $ 32,000 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter $ (11,000)