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: Sales Dirt Mountain Racing Total Bikes Bikes Bikes $ 926,000 $265,000 $ 402,000 $ 259,000 472,000 119,000 199,000 154,000 454,000 146,000 203,000 105,000 Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) 68,700 8,300 40,200 43,400 20,600 7,200 115,200 41,000 38,900 185,200 53,000 80,400 412,500 122,900 166, 700 41,500 $ 23,100 $ 36,300 20,200 15,600 35,300 51,800 122,900 $(17,900) *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