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: 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 $ 917,000 459,000 458,000 Dirt Bikes $ 265,000 111,000 154,000 Mountain Bikes $ 401,000 190,000 Racing Bikes $ 251,000 158,000 211,000 93,000 69,700 8,700 40,400 20,600 43,500 20,100 7,700 15,700 115,400 40,400 38,700 36,300 183,400 53,000 80,200 50,200 412,000 122,200 167,000 122,800 $ 46,000 $ 31,800 $ 44,000 $ (29,800) 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.