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 Total Bikes $929,000 $266,000 481,00 120,eee 448,000 146,00 Mountain Racing Bikes Bikes $484,800 $ 259,000 208, 153,880 196,09 1 06,39 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) 69,400 43,780 115,500 185,800 414,480 33,600 8,700 20,300 40,700 52,200 122,989 $ 23,100 40,50 7,600 36,90 88,888 167,800 28,200 20, 200 15,888 35,960 51,880 123,700 $(17,700) $ $ "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 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