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 $ 930,000 $ 270,000 $ 404,000 S 256,000 466,000 118,000 196,000 152,000 464,000 152,000 208,000 104.,000 Dirt BikesBikes Total Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managens Allocated common fixed expenses Total fixed expenses 69,800 8,400 40,700 20,700 43,800 20,700 14,200 40,100 38,700 35,400 86,000 54,000 80,80051,200 7,700 15,400 413,800 123,200 167,900 122,700 Net operating income (loss) S 50,200 $ 28,800 $ 40,100 $(18,700) 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