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 $269,000 $403,000 $250,000 474,000 119,000 197,000 158,000 448,000 150,000 206,000 92,000 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 Not operating income (los) 70,300 8,500 40,900 43.400 20.200 7.200 114,000 40,000 38,800 184.400 53.800 80,500 412,100 122,500 167, 500 $ 35,900 $ 27,500 $ 38,500 20,900 16,000 35,200 50.000 122,100 (30, 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. Dirt Bikes Mountain Bikes Racing Bikes [ $ (250,000) $ Totals 922,000 474,000 448,000 (250,000) Sales Variable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses Advertising Depreciation of special equipment Salaries of the product line managers Total traceable foxed expenses Product line segment margin (loss) Common forced expenses Net operating income (loss) 70,300 43,400 114,000 227,700 220,300 184,400 16,000 35,200 51,200 (301,200) 0 $ 0 $ 0 $ 35,900 What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Financial (disadvantage) per quarter Required 2 >