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 $ 926,000 457,000 469,000 $ 266,000 110,000 156,000 Mountain Bikes $ 409,000 Racing Bikes $ 251,000 195,000 152,000 214,000 99,000 69,200 8,800 40,300 20,100 43,200 20,600 7,500 15,100 114,800 40,400 38,100 36,300 185,200 53,200 81,800 50,200 412,400 123,000 167,700 121,700 $ 56,600 $ 33,000 $ 46,300 $ (22,700) 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.