The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike

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: Total $ 926,000 466,000 460,000 Dirt Bikes $ 264,000 115,000 149,000 Mountain Bikes $ 403,000 193,000 210,000 Racing Bikes $ 259,000 158,000 101,000 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) 68,800 43,000 113,700 185,200 410,700 $ 49,300 8,209 20,500 40,200 52,800 121,700 $ 27,300 40,200 7,300 38,200 80,600 166,300 $ 43,700 20,400 15, 200 35, 300 51,800 122,700 $ (21,700) *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 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 fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)