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ine Regal Lycie company manutactures three types of Dicycles-a ait Dike, a mountain bike, ana a racing dike. Data on sales and expenses for the past quarter follow. Check Total $ 300,000 120,000 180,000 Dirt Bikes $90,000 22.000 63,000 Mountain Bikes $ 150,000 $ 60,000 90,000 Racing Bikes 60,000 33,000 27,000 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) 6,000 30,000 23,000 35,000 60.000 148.000 52,000 10,000 6,000 12,000 18.000 46. 0 $17,000 14.000 9,000 15,000 30.000 0 0.000 24,000 10,000 12. NO 36,000 9,000 $ $ "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

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