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 $ 926,000 466,000 460,000 Dirt Bikes $ 267,000 110,000 157,000 Mountain Bikes Racing Bikes $ 401,000 203,000 198,000 $ 258,000 153,000 105,000 69,100 8,600 40,200 20,300 43,700 20,300 7,600 15,800 114,300 40,300 38,200 35,800 185,200 53,400 80,200 51,600) 412,300 122,600 166,200 $ 47,700 $ 34,400 $ 31,800 123,500 $ (18,500) 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.