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 $ 930,000 467,000 463,000 Dirt Bikes $ 268,000 118,000 150,000 Mountain Bikes $ 408,000 192,000 Racing Bikes $ 254,000 157,000 216,000 97,000 69,800 8,200 40,700 20,900 43,800 20,300 7,800 15,700 113,900 40,200 38,400 35,300 186,000 53,600 81,600 50,800 413,500 122,300 168,500 122,700 $ 49,500 $ 27,700 $ 47,500 $ (25,700) 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.