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 $921,000 $264,000 $ 404,000 $ 253,000 152,000 101,000 456,000 111,000 193,000 expenses Contribution margin Fixed expenses: 465,000 153,000 211,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 8,200 20,700 40,200 52,800 411,300 121,900 167,000 68,900 43,800 114,400 184,200 20,300 15,700 35,800 50,600 122,400 $ 53,700 31,100 $ 44,000 $(21,400) 40,400 7,400 38,400 80,800 Total fixed expenses Net operating income (loss) 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