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 $ 928,000 477,000 451,000 Dirt Mountain Racing Bikes Bikes Bikes $266,000 $ 410,000 $ 252,000 120,000 203,000 154,000 146,000 207,000 98,000 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 43,500 114,300 185, 600 413,100 $ 37,900 8,600 20,300 40,800 53,200 122,900 $ 23,100 40,600 7,300 38.100 82,000 168,000 $ 39,000 20,500 15,900 35.400 50,400 122,200 $(24, 200) *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