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 Bikes Total Bikes Bikes Sales Variable manufacturing and selling $926,000 $264,000 $407,000 255,000 expenses Contribution margin Fixed expenses 465,000 112,000 193,000 160,000 461,000 152,000 214,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 69,3008,100 40,700 20,500 43,600 21,000 114,300 40,200 38,300 185,200 52,80081,400 412,400-122.10167,700-122.600- 48,600 29,900 46,300 $(27,600) 7,300 15,300 35,800 51,000 Total fixed expenses Net operating income (loas) 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 2 Required 1 Required 2 Required 3 Should the production and sale of racing bikes be discontinued? Yes ONo 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 Racing Bikes Contribution margin (loss) Traceable ixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)