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 Biken Bikes $ 913,000 $262,000 $ 401,000 $ 250,000 466,000 119,000 194,000 153,000 447,000 143,000 207,000 97,000 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) 69,700 8,400 40,900 20,400 43,500 20,800 7,400 15,300 114,900 40, 700 38,900 35,300 182,600 52,400 80,200 50,000 410,700 122,300 167,400 121,000 $36,300 $ 20,700 $ 39,600 $(24,000) "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