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: Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses! Advertising, traceable Depreciation of special equipment Salaries of product-Line managers Allocated connon fixed expenses Total fixed expenses Net operating income (loss) Dirt Mountain Racing Total Bikes Bikes Bikes $929,800 $270,000 $409,888 $ 250,000 467,000 113,000 201,888 253,000 462,000 157,888 288,000 97,000 69,300 8.800 40,200 20,300 44,200 20,800 7,800 15,600 114,200 40,400 38,100 35,700 185.000 54,000 81,800 50.000 413,500 124,100 167,900 121,680 $ 48,500 $ 33,000 $40,100 $(24,680) "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 fine 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