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) *Allocated on the basis of sales dollars. Total Dirt Bikes $ 914,000 469,000 445,000 $ 261,000 116,000 145,000 Mountain Bikes $ 400,000 Racing Bikes $ 253,000 194,000 159,000 206,000 94,000 69,500 8,300 40,700 20,500 44,400 20,600 7,900 15,900 115,500 40,800 38,100 36,600 182,800 52,200 80,000 50,600 412,200 121,900 166,700 123,600 $ 32,800 $ 23,100 $ 39,300 $ (29,600) 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.