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 Sales Variable manufacturing and selling 926, 000 $265,000 $ 404,000 $ 257,000 156,000 460,000 112,000 192,000 expenses Contribution margin Fixed expenses: 466,000 153,000 212,000 101,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 40,100 7,400 38,900 80,800 414,300 122,900 167,200 20,700 15,700 36, 400 51,400 124,200 30,100 $ 44,800 $(23,200) 69,100 8,300 44,000 20,900 116,000 4,700 185,200 53,000 Total fixed expenses Net operating income (loss) $ 51,700 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