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 equipment Salaries of product-Line managers Allocated common fixed expenses Total fixed expenses Net operating income (Loss) Dirt Mountain Racing Total Bikes Bikes Bikes $931,000 $267,000 $407,000 $ 257,000 476,000 115,000 207,000 154,000 455,000 152,000 200,000 183,000 68,800 8,400 40,100 20, 300 43,200 20,400 7,300 15,500 116, 100 40,000 38,700 36,600 186,200 53,400 81,400 51,400 414,300 123,000 167,500 123,800 $ 40,700 $ 29,000 $ 32,500 $(20,800) "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