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 Bikes Total Bikes Bikes $918,000 $262,000 400,000 256,000 152,000 Sales Variable manufacturing and selling 461,000 116,000 193,000 expenses Contribution margin Fixed expenses: 457,000 146,000 207,000 104,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 40,600 7,900 38,600 80,000 411,600 122,400 167,100 69,400 20,300 15,500 35,100 51,200 122,100 $45,400 23,600 39,900 $(18,100) 8,500 44,300 20,900 114,300 40,600 52,400 183,600 Total fixed expenses Net operating income (loss) 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