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 Sales $926,000 $263,000 $408,000 $ 255,000 Variable manufacturing and 458,000 116,000 192,000 150,000 selling expenses Contribution margin 468,000 147,000 216,000 105,000 Fixed expenses : Advertising, 70,300 8,800 40,900 traceable 20,600 Depreciation of 43,500 20,700 7,200 15,600 special equipment Salaries of product-line 115,700 40,400 38,600 36,700 managers Allocated common 185,200 52,600 81,600 fixed expenses* 51,000 Total fixed expenses 414,700 122,500 168,300 123,900 Net operating income $ 53,300 $ 24,500 $ 47,700 $(18,900) (loss) *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. 2 Required Required Required 1 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 Racing Bikes 0 0 0 0 Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) 0 0 $ 01 0 $ 0 0 $ 0 0 Net operating income (loss) $ 0