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 Total Bikes $ 931,000 $267,000 479,000 115,000 452,000 152,000 $ Mountain Racing Bikes Bikes 409,000 $ 255,000 206,000 158,000 203,000 97,000 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) 69,400 8,500 44,000 20,600 115,600 40,600 186, 200 53,400 415,200 123, 100 $ 36,800 $ 28,900 40,300 20,600 7,800 15,600 38,400 36,600 81,800 51,000 168,300 123,800 34,700 $(26, 800) $ *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