The Regal Cycle Company manufactures three types of bicyclesa 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 $ 934,000 Dirt Bikes $ 268,000 467,000 119,000 467,000 149,000 Mountain Bikes $ 406,000 197,000 209,000 Racing Bike $ 260,000 151,000 109,000 70,000 8,300 40,800 20,900 44,300 20,700 7,600 16,000 113,400 40,000 38,000 35,400 186,800 53,600 81,200 52,000 414,500 122,600 167,600 124,300 $ 52,500 $ 26,400 $ 41,400 $ (15,300) 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