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 Sales $ 925, 000 $263,000 $ 404,000 $ 258,090 Variable manufacturing and selling expenses 468, 090 116, 090 194, 090 158, 090 Contribution margin 457,000 147, 090 210, 090 100,090 Fixed expenses: Advertising, traceable 69,500 8,600 40, 500 20, 409 Depreciation of special equipment 43, 200 20, 100 7,800 15, 300 Salaries of product- line managers 114, 800 40, 800 38, 800 35, 200 Allocated common fixed expenses* 185, 090 52, 600 80, 800 51, 600 Total fixed expenses 412, 500 122, 100 167,900 122,500 Net operating income (loss) 6 44,500 $ 24,900 42, 100 $ (22,500) `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