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: Total $ 928,000 475,000 453,000 Dirt Bikes $ 266,000 118,000 148,000 Mountain Bikes $ 403,000 197,000 206, 000 Racing Bikes $ 259,000 160,000 99,000 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 43,900 114, 300 185, 600 413, 700 39, 300 8,500 20, 800 40,000 53,200 122,500 $ 25, 500 40, 600 7,200 38, 300 80, 600 166, 700 39, 300 20,800 15, 900 36,000 51, 800 124, 500 $ (25, 500) $ $ *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