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 $ 927,000 454,000 473,000 Dirt Bikes $ 262,000 111,000 151,000 Mountain Bikes $ 408,000 191,000 Racing Bikes $ 257,000 152,000 217,000 105,000 70,100 8,600 40,800 20,700 44,000 20,600 7,600 15,800 114,900 40,300 38,200 36,400 185,400 52,400 81,600 51,400 414,400 121,900 168,200 124,300 $ 58,600 $ 29,100 $ 48,800 $ (19,300) 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.