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 Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 919,000 $ 261.000 $402,000 5 256,600 variable manufacturing and selling expenses 483,000 119,000 207,200 157,000 Contribution margin 436,600 142,000 195,000 Fixed expenses: 99,000 Advertising, traceable 69,400 8,300 40,400 20,700 Depreciation of special equipment 44,300 20,400 7,900 16,000 Salaries of product-line managers 115,100 40,660 38,890 35, 700 Allocated conmon fixed expenses 183,880 52,200 BO, 400 51,200 Total fixed expenses 412,600 121,500 167.500 123,600 Net operating income (loss) $ 23,400 $ 20,500 $ 27,500 $(24,600) "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