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 $ 922,000 471,000 451,000 Dirt Bikes $ 263,000 117,000 146,000 Mountain Bikes $ 401,000 198,000 Racing Bikes $ 258,000 156,000 203,000 102,000 69,800 8,500 40,400 20,900 43,500 20,200 8,000 15,300 115,200 40,300 38,800 36,100 184,400 52,600 80,200 51,600 412,900 121,600 167,400 123,900 $ 38,100 $ 24,400 $ 35,600 $ (21,900) 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.