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. Sales Variable manufacturing and selling expenses Dirt Mountain Racing Total Bikes Bikes Bikes $918.000 $262.000 $401,000 $255.000 456.000 110.000 190.000 156.000 Contribution margin 462.000 152.000 211.000 99.000 Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product line managers Allocated common fixed expenses 69,500 44,000 115.100 183.600 8,200 20,400 40.200 52.400 40,800 7.900 38,400 80,200 20,500 15.700 36,500 51.000 Total fixed expenses 412,200 121,200 167,300 123,700 $ 49.800 $30,800 $ 43,700 $ (24700) Net operating Income (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 2a. Prepare a segmented income statement. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Net operating income (loss) 2b. Would a segmented income statement format be more usable to management in assessing the long-run profitability of the various product lines. Yes