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). Total Dirt Mountain Racing Bikes Bikes Bikes $925,000 $267,000 $405,000 $253,000 457,000 113,000 190,000 154,000 468,000 154,000 215,000 99,000 69,500 8,100 40,500 20,900 43,700 20,800 7,600 15,300 114,000 40,100 38.800 35,100 185,000 53,400 81,000 50,600 412,200 122,400 167,900 121,900 $ 55,800 $ 31,600 $ 47,100 $(22,900) *Allocated on the basis of sales dollars. 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