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 Bikes Total Bikes Bikes Sales Variable manufacturing and selling $918,000 $263,000 402,000 253,000 158,000 476,000 115,000 203,000 expenseS Contribution margin Fixed expenses: 442,000 148,000 199,000 95,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 20,300 15,100 35,000 50,600 121,000 $ 31,900 26,700 31,200 $(26,000) 40,900 7,500 39,000 80,400 410,100 121,300 167,800 69,600 8,400 42,800 20,200 114,100 40,100 52,600 183,600 Total fixed expenses Net operating income (loss) 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