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 Not operating income (loss) "Allocated on the basis of sales dollars. Total $ 924,000 474,000 Dirt Bikes $270,000 111,000 Mountain Bikes $ 403,000 Racing Bikes $ 251,000 450,000 159,000 206,000 197,000 157,000 94,000 69,500 8,200 41,000 20,300 43,900 20,800 7,500 15,600 115,500 40,400 38,300 36,800 184,800 54,000 413,700 123,400 80,600 167,400 50,200 122,900 $ 36,300 $ 35,600 $ 29,600 $ (28,900) 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