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: Sales Total $ 935,000 473,000 462,000 Dirt Bikes $ 270,000 115,000 155,000 Mountain Bikes $ 406,000 207,000 199,000 Racing Bikes $ 259,000 151,000 108,000 40,900 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) 70,700 43,600 114,400 187,000 415,700 $ 46,300 8,800 20,700 40,100 54,000 123,600 $ 31,400 7,700 38,700 81,200 168,500 $ 30,500 21,000 15,200 35,600 51,800 123,600 $ (15,600) *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