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 $ 927,000 463,000 464,000 $ 264,000 116,000 148,000 Mountain Bikes $ 409,000 192,000 Racing Bikes $ 254,000 155,000 217,000 99,000 70,400 8,900 40,700 20,800 43,200 20,400 7,300 15,500 114,200 40,800 38,300 35,100 185,400 52,800 81,800 50,800 413,200 122,900 168,100 122,200 $ 50,800 $ 25,100 $ 48,900 $ (23,200) 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.