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 $ 925,000 471,000 454,000 Dirt Bikes $ 266,000 112,000 154,000 Mountain Bikes 401,000 206,000 195,000 Racing Bikes $ 258,000 153,000 105,000 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) 70,900 43,300 114,300 185,000 413,500 $ 40,500 9,000 20,600 40,500 53,200 123,300 $ 30,700 40,900 7,200 38,200 80,200 166,500 $ 28,500 21,000 15,500 35,600 51,600 123,700 $ (18,700) *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