The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Racing Bikes $ 254,000 Dirt Mountain Total Bikes Bikes $ 919,000 $262,000 $ 403,000 461,000 117,000 191,000 458,000 145,000 212,000 153,000 101,000 Sales 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) 68,400 8,100 40,200 20,100 43,900 21,000 7,600 15,300 115,400 40,500 38,800 36,100 183,800 52,400 80,600 50,800 411,500 122,000 167,200 122,300 $ 46,500 $ 23,000 $ 44,800 $(21,300) *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