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 $ 916,000 459,000 457,000 Dirt Bikes $ 261,000 116,000 145,000 Mountain Bikes $ 400,000 191,000 209,000 Racing Bikes $ 255,000 152,000 103,000 69,700 8,300 40,500 20,900 43,200 20,400 7,500 15,300 114,900 40,400 38,000 36,500 183,200 52,200 80,000 51,000 411,000 121,300 166,000 123,700 $ 46,000 $ 23,700 $ 43,000 $ (20,700) 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.