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xercise 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 $916,000 $264,000 $400,000 $ 252,000 456,000 111,000 190,000 155,000 460,000 153,000 210,000 97,000 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 8,200 40,400 20, 200 43,700 20,500 7,400 15,800 114,800 40,300 38,700 35,800 183,200 52,800 80,000 50,400 410,500 121,800 166,500 122,280 $ 49,500 $ 31,200 $ 43,500 $(25,200) "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. in the tabs below

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