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 Bikes Mountain Racing Bikes Total Bikes Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: $ 924,000 $265,000 $ 407,000 205,000 202,000 252,000 154,000 98,000 472,000 113,000 452,000 152,000 EE Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 8,800 44,400 20,800 114,800 40,300 53,000 413,400 122,900 $ 38,600 29,10 20,300 15,600 36,200 50,400 168,000 122390 40,300 8,000 38,300 81,400 69,400 184,800 Total fixed expenses Net operating income (loss) 122,500 34,000 $(24,500) 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