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 $ 920,000 474,000 Dirt Bikes $ 266,000 115,000 Mountain Bikes $ 403,000 200,000 Racing Bikes $ 251,000 159,000 446,000 151,000 203,000 92,000 69,300 8,300 40,500 20,500 43,700 21,000 7,300 15,400 115,100 40,200 38,400 36,500 184,000 53,200 412,100 122,700 80,600 166,800 50,200 122,600 $ 33,900 $ 28,300 $ 36,200 $ (30,600) 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