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 $ 928,000 464,000 464,000 Dirt Bikes $ 264,000 112,000 152,000 Mountain Bikes $ 404,000 195,000 209,000 Racing Bikes $ 260,000 157,000 103,000 69,700 8,800 40,300 20,600 44,000 20,600 7,800 15,600 115,400 41,000 38,500 35,900 185,600 52,800 80,800 52,000 414,700 123,200 167,400 124,100 $ 49,300 $ 28,800 $ 41,600 $ (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.