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 $ 924,000 470,000 454,000 Dirt Bikes $ 262,000 112,000 150,000 Mountain Bikes $ 405,000 200,000 Racing Bikes $ 257,000 158,000 205,000 99,000 69,600 8,300 40,900 20,400 44,400 20,700 7,800 15,900 116,200 40,400 38,800 37,000 184,800 52,400 81,000 51,400 415,000 121,800 168,500. 124,700 $ 39,000 $ 28,200 $ 36,500 $ (25,700) 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.