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 $921,000 $263,000 $ 403,000 485,000 119,000 207,000 Sales 255,000 159,000 Variable manufacturing and selling expenses Contribution margin Pixed expenses: 436,000 144,000 196,000 96,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 8,400 43,500 20,400 115,500 40,700 52,600 68,900 40,300 7,700 39,000 80,600 412,100 122,100 167,600 20,200 15,400 35,800 51,000 122,400 28,400 $ (26,400) 184,200 Total fixed expenses Net operating income (loss) $ 23,900 21,900 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