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 $ 928,000 458,000 470,000 Dirt Bikes $ 270,000 117,000 153,000 Mountain Bikes $ 406,000 191,000 215,000 Racing Bikes $ 252,000 150,000 102,000 69,400 8,200 40,900 20,300 44,000 20,700 7,600 15,700 114,500 40,300 38,900 35,300 185,600 54,000 81,200 50,400 413,500 123,200 168,600 121,700 $ 56,500 $ 29,800 $ 46,400 $ (19,700) 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.