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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 Contribution margin Fixed expenses Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Het operating Income (10) Dirt Mountain Racing Total Bikes Bikes Bikes $ 929,000 $266,000 $409,000 $ 254,000 485,000 120,000 208,000 157.000 444,000 14000 201,000 92.000 70,200 8,800 40,700 20,700 43,600 20,900 7,500 15,200 113,900 40, 700 38,200 35,000 185,300 53,200 81,800 50.800 413.500 123,500 168,200 121,700 $ 30,5000 22,400 $ 12,000 5124,700) "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 di continued. 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 bikos? 2. Should the production and sale of racing bikes be discontinued? 3. Prepare a property formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines