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 $ 930,000 457,000 473,000 Dirt Bikes $ 268,000 112,000 156,000 Mountain Bikes $ 410,000 191,000 219,000 Racing Bikes $ 252,000 154,000 98,000 69,400 8,400 40,500 20,500 43,200 20,500 7,300 15,400 114,100 40,400 38,500 35,200 186,000 53,600 82,000 50,400 412,700 122,900 168,300 121,500 $ 60,300 $ 33,100 $ 50,700 $ (23,500) 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.