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 $ 930,000 467,000 463,000 $ 270,000 116,000 154,000 Mountain Bikes $ 404,000 195,000 209,000 Racing Bikes $ 256,000 156,000 100,000 69,900 8,900 40,900 20,100 43,600 20,300 7,800 15,500 115,900 40,500 38,600 36,800 186,000 54,000 80,800 51,200 415,400 123,700 168,100 123,600 $ 47,600 $ 30,300 $ 40,900 $ (23,600) 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.