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 Mountain Racing Bikes Bikes 405,800 $ 251,880 192,000 159,000 213,000 92,888 Dirt Total Bikes Sales 5 925,000 $269,900 S Variable manufacturing and selling expenses 464,000 113,000 Contribution margin 461,080 156,080 Fixed expenses: Advertising, traceable 79,500 8,700 Depreciation of special equipment 43,800 20,400 Salaries of product-line managers 114,200 40,200 Allocated common fixed expenses 185,000 53,800 Total fixed expenses 413,500 123,100 Net operating income (loss) $ 47,500 $ 32,908 5 40,900 28,900 7,500 15,980 38,800 36,000 81,000 50,280 167,400 123,000 45,600 $(31,688) "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