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 $ 922, 000 482, 000 440,000 Dirt Bikes $ 264,000 114,000 150, 000 Mountain Bikes $ 402,000 210,000 192, 000 Racing Bikes $ 256,000 158, 000 98,000 69,400 8, 900 40, 200 20, 300 43,500 20, 400 7, 400 15, 700 115, 100 40, 600 38, 100 36, 400 184, 400 52, 800 80, 400 412, 400 122, 700 166, 100 $ 27,600 $ 27,300 $ 25,900 51,200 123, 600 $ (25,600) 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.