The Regal Cycle Company manufactures three types of bicyclesa 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 $ 929,000 $266,000 $ 409,000 $ 254,000 474,000 117,000 199,000 158,000 455,000 149,000 210,000 96,000 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated corrmon fixed expenses* Total fixed expenses Net operating income (loss) 69,200 8,900 43,100 20,600 114,900 40,500 185,800 53,200 413,000 123,200 42,000 $25,800 $ 40,200 20,100 7,300 15,200 38,200 36,200 81,800 50,800 167,500 122,300 42,500 $(26,300) $ *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