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: Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipent Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating income (loss) Dirt Mountain Racing Total Bikes Bikes Bikes $928,000 $268,000 $400,000 $ 252,000 471,000 119,000 198, eee 154, eee 457,000 149,00 210, eee 98, cee 69,500 8,300 40,300 20,900 43,700 20,200 7,90 15,600 114,800 40,00 38,600 35,400 185,600 53,600 81,600 50,400 413,60 122,900 168,400 122,300 $ 43,400 $ 26,100 $ 41,600 $(24,300) "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