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 $ 922,000 $261,000 $ 402,000 $ 259,000 468,000 120,000 196,000 152,000 454,000 141,000 206,000 107,000 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) 70,100 8,900 40,700 20,500 44,000 20,600 7,900 15,500 114,500 40,100 38, 400 36,000 184,400 52,200 80,400 51,800 413,000 121,800 167,400 123,800 $ 41,000 $ 19,200 $ 38,600 $(16,800) "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. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? ( Required Required 2 > ences Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes ONO Required 1 Required 2 Required 3 Prepare a properly formatted segmented income statement that would be more useful to management in a run profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes 1 Contribution margin (loss) Traceable fixed expenses: 1. Total traceable fixed expenses Product line segment margin (loss) IT TU IN Net operating income (loss)