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 expensest 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 Dirt Bikes $263,000 459,000 112,000 468,000 151,000 Mountain Bikes $ 407,000 196,000 211,000 Racing Bikes $ 257,000 151,000 106,000 69,500 8,600 40,700 20,200 44,000 20,500 7,700 15,800 114,300 40,300 38,100 35,900 185,400 52,600 81,400 51,400 413,200 122,000 167,900 123,300 $ 54,800 $ 29,000 $ 43,100 $ (17,300) 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.