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 Bikes Mountain Racing Bikes Total Bikes Sales Variable manufacturing and selling $925, 000 $267,000 401,000 257,000 155,000 473,000 118,000 200,000 expenses Contribution margin Fixed expenses: 452,000 149,000 201,000 102,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 41,000 7,400 38,500 80,200 413,400 123,000 167,100 8,700 43,600 20,300 114,300 40,600 53,400 70,500 20,800 15,900 35,200 51,400 123,300 33,900 $(21,300) 185,000 Total fixed expenses Net operating income (loss) $ 38,600 $ 26,000 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