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 Dirt Bikes $ 928,000 463,000 465,000 $ 265,000 113,000 152,000 Mountain Bikes $ 406,000 193,000 213,000 Racing Bikes $ 257,000 157,000 100,000 70,100 8,800 40,700 20,600 43,800 20,400 7,900 15,500 115,700 40,500 39,000 36,200 185,600 53,000 81,200 51,400 415,200 122,700 168,800 123,700 $ 49,800 $ 29,300 $ 44,200 $ (23,700) 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.