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 $ 920,000 464,000 456,000 Dirt Bikes $ 266,000 114,000 152,000 Mountain Bikes $ 403,000 195,000 208,000 Racing Bikes $ 251,000 155,000 96,000 69,300 8,200 40,600 20,500 44,000 20,400 7,600 16,000 114,500 40,400 38,800 35,300 184,000 53,200 80,600 50,200 411,800 122,200 167,600 122,000 $ 44,200 $ 29,800 $ 40,400 $ (26,000) 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.