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. Racing Bikes $257,000 155,000 Total Dirt Bikes $ 929,000 478,000 $263,000 Mountain Bikes $ 409,000 116,000 451,000 147,000 207,000 202,000 102,000 70,200 9,000 40,300 20,900 44,300 20,900 7,700 15,700 114,300 40,500 38,300 35,500 185,800 52,600 414,600 123,000 81,800 168,100 51,400 123,500 $ 36,400 $ 24,000 $ 33,900 $ (21,500) 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