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 Mountain Racing Total Bikes Bikes Bikes 5929,000 $265,000 5 405,000 $ 259,000 466,000 113,000 195.000 158,000 463.000 152,000 210,000 101,000 Sales Variable manufacturing and selling expenses Contribution margin Exed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) 70,100 9.000 40,300 20,800 43,800 20,500 7,600 15,700 114,600 40,000 38,900 35,700 185 800 53,000 81,000 51,800 414300 122,500 167,800 124.000 543,700 5 29,500 $ 42,200 $(23,000) "Allocated on the basis of sales dollars 5 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