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. 25 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 $923,000 482,000 Dirt Bikes $264,000 117,000 Mountain Bikes $405,000 206,000 Racing Bikes $ 254,000 159,000 441,000 147,000 199,000 95,000 70,400 8,700 40,800 20,900 43,700 20,300 7,900 15,500 114,700 40,100 38,900 35,700 184,600 52,800 81,000 50,800 413,400 121,900 168,600 122,900 $27,600 $ 25,100 $ 30,400 $ (27,900) 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.