The Regal Cycle Company manufactures three types of bicycles - dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Mountain Total Dirt Bikes Bikes Sales Racing Bikes $920,00 $ 265,000 5 483,000 $ 252,800 Variable manufacturing and selling expenses 472,000 112,000 285,000 155,000 Contribution margin 448,000 153,000 198,00 97,00 Fixed expenses! Advertising, traceable 69,600 8,600 40,900 20,180 Depreciation of special equipment 43,800 20,300 7.400 15,300 Salaries of product-line managers 113,980 40,100 38,800 35,000 Allocated common fixed expenses 184,000 53,000 80,600 50,400 Total fixed expenses 410,500 122,000 167,788 120,800 Net operating income (loss) $ 37,500 $ 31,000 $ 30,300 5 (23,8001 "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