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 Mountain Racing Total Bikes Bikes Bikes 5924,000 $270,000 $401,000 $ 253,000 458,000 113,000 193,000 152,800 466,000 157,00 200.000 201,000 Sales Variable manufacturing and selling expenses enses 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) 70,000 8,888 43,800 20,400 115,500 40,900 184,800 54,000 414,100 124, 100 51,900 $ 32,900 $ 40,900 20,300 7,800 15,600 38,600 36,000 80,200 50.600 162500 122,50e 40,500 $(21,500) $ '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