The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Racing Bikes Total $ 921,000 468,000 453,000 Dirt Bikes $ 266,000 111,000 155,000 Mountain Bikes $ 401,000 203,000 198,000 $ 254,000 154,000 100,000 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) 69,900 43,600 113,900 184,200 411,600 $ 41,400 8,800 20,200 40,300 53,200 122,500 $ 32,500 40,800 7,600 38,400 80,200 167,000 $ 31,000 20,300 15,800 35,200 50,800 122,100 $ (22,100) *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