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 $ 932,000 Dirt Bikes 476,000 456,000 $ 267,000 114,000 153,000 Mountain Bikes $ 408,000 209,000 199,000 Racing Bikes $ 257,000 153,000 104,000 69,200 8,500 40,600 20,100 44,500 20,600 7,900 16,000 114,500 40,100 38,600 35,800 186,400 53,400 81,600 51,400 414,600 122,600 168,700 123,300 $ 41,400 $ 30,400 $ 30,300 $ (19,300) es 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.