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 Dirt Bikes $ 929,000 470,000 459,000 $ 262,000 115,000 147,000 Mountain Bikes $ 409,000 198,000 Racing Bikes $ 258,000 211,000 157,000 101,000 69,300 8,600 40,500 20,200 43,800 20,600 7,800 15,400 114,200 40,000 38,400 35,800 185,800 52,400 81,800 51,600 413,100 121,600 168,500 123,000 $ 45,900 $ 25,400 $ 42,500 $ (22,000) 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