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 Racing Mountain Bikes Bikes Bikes Total $922,000 $263,000 $403,000 $ 256,000 Sales Variable manufacturing and selling 484,000 119,000 156,000 209,000 expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses 144,000 100,000 438,000 194,000 9,000 21,000 40,000 70,300 44,200 115,400 40,800 7,200 38,600 80,600 167,200 20,500 16,000 36,800 184,400 414,300 $ 23,700 $ 21,400 $26,800 $(24,500) 52,600 122,600 51,200 124,500 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