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 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 tined expenses Net operating income (loss) Dirt Mountain Racing Total Bikes Bikes Bikes $ 927,000 $268,000 $ 407,000 $ 252,000 461,000 112,000 195,000 154,000 466,000 156,000 212,000 98,000 69,500 8,200 40,400 20,900 43,400 20.200 7.400 15,800 116,400 40.600 38.900 36,900 185,400 53,600 81,400 50,400 416,700 122,600 168, 100 124.000 $ 51,300 $ 33,400 $ 43,900 $126,000) "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