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 $ 920,000 478,000 442,000 Dirt Bikes $ 262,000 118,000 144,000 Mountain Bikes $ 408,000 202,000 Racing Bikes $ 250,000 158,000 206,000 92,000 69,100 8,300 40,100 20,700 43,800 20,700 7,700 15,400 115,600 40,600 38,700 36,300 184,000 52,400 81,600 50,000 412,500 122,000 168,100 122,400 $ 29,500 $ 22,000 $ 37,900 $ (30,400) 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.