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 Dirt Bikes $930,000 472,000 458,000 $ 263,000 113,000 150,000 Mountain Bikes $ 409,000 Racing Bikes $ 258,000 202,000 207,000 157,000 101,000 69,500 8,400 40,300 20,800 43,500 20,300 7,700 15,500 114,600 40,900 38,300 35,400 186,000 52,600 81,800 51,600 413,600 122,200 168,100 123,300 $ 44,400 $ 27,800 $ 38,900 $ (22,300) 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