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: DirtMountain Racing Bikes Total Bikes Bikes Sales Variable manufacturing and selling $921,000 $263,000 402,000 256,000 158,000 459,000 111,000 190,000 expenses Contribution margin Fixed expenses: 462,000 152,000 212,000 98,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 40,100 7,100 38,900 80,400 412,500 122,400 166,500 8,500 43,700 20,800 115,400 40,500 52,600 20,600 15,800 36,000 51,200 123,600 45,500 $ (25,600) 69,200 184,200 Total fixed expenses Net operating income (loss) $ 49,500 $ 29,600 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