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 $ 931,000 478,000 453,000 Dirt Bikes $ 268,000 117,000 151,000 Mountain Bikes $ 404,000 206,000 Racing Bikes $ 259,000 155,000 198,000 104,000 70,100 8,700 40,900 20,500 44,200 20,500 7,800 15,900 116,300 40,900 39,000 36,400 186,200 53,600 50,800 51,800 416,800 123,700 168,500 124,600 $ 36,200 $27,300 $ 29,500 $ (20,600) Management is concemed 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.