The Regal Cycle Company manufactures three types of bicyclesa 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 $ 927,000 470,000 457,000 Dirt Bikes $ 267,000 120,000 147,000 Mountain Bikes $ 407,000 191,000 Racing Bikes $ 253,000 159,000 216,000 94,000 70,000 8,500 40,600 20,900 43,400 20,300 7,500 15,600 115,300 40,800 38,200 36,300 185,400 53,400 81,400 50,600 414,100 123,000 167,700 123,400 $ 42,900 $ 24,000 $ 48,300 $ (29,400) 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.