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 $ 913,000 479,000 434,000 Dirt Bikes $ 261,000 115,000 146,000 Mountain Bikes $ 400,000 206,000 194,000 Racing Bikes $ 252,000 158,000 94,000 68,900 8,500 40,200 20,200 43,700 21,000 7,200 15,500 114,100 40,100 38,900 35,100 182,600 52,200 80,000 50,400 409,300 121,800 166,300 121,200 $ 24,700 $ 24,200 $ 27,700 $ (27,200) 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.