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 $ 926,000 $263,000 $ 405,000 $ 258,00 471,000 119,000 200,000 152,eee 455,000 1144,000 205,000 106,000 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) 69,100 8,500 40,300 20,300 44,000 20,800 7,400 15,800 114,900 40,600 38,800 35,500 185,200 52,600 81.000 51,600 413, 200 122,500 167,500 123,200 $ 41,800 $ 21,500 $ 37,500 $(17,200) "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