The Regal Cycle Company manufactures three types of bicyclesa 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 $ 921,000 471,000 450,000 Dirt Bikes $ 262,000 111,000 151,000 Mountain Bikes $ 403,000 206,000 Racing Bikes $ 256,000 154,000 197,000 102,000 69,600 8,300 40,600 20,700 43,100 20,400 7,600 15,100 114,800 40,600 38,100 36,100 184,200 52,400 80,600 51,200 411,700 121,700 166,900 123,100 $ 38,300 $ 29,300 $ 30,100 $ (21,100) 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.