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 $ 929,000 464,000 465,000 Dirt Bikes $ 268,000 115,000 153,000 Mountain Bikes $404,000 196,000 Racing Bikes $257,000 208,000 153,000 104,000 69,600 8,300 40,900 20,400 43,900 20,500 7,900 15,500 115,100. 40,300 38,300 36,500 185,800 53,600 80,800 51,400 414,400 122,700 167,900 123,800 $ 50,600 $ 30,300 $ 40,100 $ (19,800) 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.