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 Total $ 926,000 471,000 455,800 Dirt Mountain Bikes Bikes $263,000 $406,999 115,000 199,00 148.800 207,889 Racing Bikes $ 257,000 157,800 180,000 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) 68,600 8,300 43,39 20,600 115,200 48,600 185,280 52.609 412,300 122, 100 $ 42,700 $ 25,900 $ 40,100 20,200 7.600 15,180 38,300 36,300 81,280 51,400 167,200 123, 39,800 $(23,880) *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. search