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 Bikes Total Bikes Bikes $926,000 $265,000 402,000 259,000 Sales Variable manufacturing and selling 479,000 118,000 210,000 151,000 expenses Contribution margin Fixed expenses: 447,000 147,000 192, 000 108,000 40,600 8,000 38,800 80,400 411,900 121,800 167,800 8,100 43,500 20,300 40,400 53,000 68,900 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 20,200 15,200 35,100 51,800 122,300 24,200 $(14,300) 114,300 185,200 Total fixed expenses Net operating income (loss) $ 35,100 25,200 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