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 $ 921,000 263,000 406,000 252,000 Variable manufacturing and selling expenses 459,000 113,000 193000 153,000 99,000 Sales Contribution margin Fixed expenses: 462,000 150,000 213,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 8,700 43,800 20,900 115,800 40,800 184,200 52,600 20,200 15,200 36, 500 50,400 69,100 40,200 7,700 38, 500 81,200 Total fixed expenses Net operating income (loss) 412,900 123,000167, $ 49,100 407: 600122,300 27,000 $ 45,400 $(23,300) 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