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 $925,000 Dirt Bikes 472,000 453,000 $ 268,000 116,000 152,000 Mountain. Bikes $ 404,000 204,000 Racing Bikes $ 253,000 152,000 200,000 101,000 69,700 8,300 40,900 20,500 44,000 20,800 7,300 15,900 114,100 40,500 38,300 35,300 185,000 53,600 80,800 50,600 412,800 123,200 167,300 122,300 $ 40,200 $ 28,800 $ 32,700 $ (21,300) 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