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 $ 918,000 464,000 454,000 $ 262,000 116,000 146,000 Mountain Bikes $ 405,000 197,000 Racing Bikes $ 251,000 151,000 208,000 100,000 69,900 8,800 40,900 20,200 43,200 20,600 7,500 15,100 115,900 40,500 39,000 36,400 183,600 52,400 81,000 50,200 412,600 122,300 168,400 121,900 $ 41,400 $ 23,700 $ 39,600 $ (21,900) 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