Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 924,000 $ 262,000 $ 404,000 $ 258,000 Variable manufacturing and se

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Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 924,000 $262,000 $ 404,000 $ 258,000
Variable manufacturing and selling expenses 457,000 112,000193,000 152,000
Contribution margin 467,000 150,000 211,000 106,000 Fixedexpenses: Advertising, traceable 69,300 8,400 40,600 20,300
Depreciation of special equipment 44,200 20,500 7,700 16,000
Salaries of product-line managers 116,000 40,900 38,200 36,900Allocated common fixed expenses* 184,800 52,400 80,800 51,600
Total fixed expenses 414,300 122,200 167,300 124,800
Net operating income (loss) $ 52,700 $ 27,800 $ 43,700 $(18,800)
*Allocated on the basis of sales dollars. Management isconcerned about the continued losses shown by the racing bikes andwants a recommendation as to whether or not the line should bediscontinued. The special equipment used to produce racing bikeshas no resale value and does not wear out. Required:
1. What is the financial advantage (disadvantage) per quarter ofdiscontinuing the Racing Bikes?
2. Should the production and sale of racing bikes bediscontinued?
3. Prepare a properly formatted segmented income statement thatwould be more useful to management in assessing the long-runprofitability of the various product lines.