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 $ 929,000 465,000 464,000 $ 269,000 115,000 154,000 Mountain Bikes $ 400,000 197,000 Racing Bikes $ 260,000 153,000 203,000 107,000 69,200 8,800 40,200 20,200 43,100 20,500 7,400 15,200 114,800 40,400 38,800 35,600 185,000 53,000 80,000 52,000 412,900 123,500 166,400 123,000 $51,100 $ 30,500 $ 36,000 $ (16,000) 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.