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. Racing Total Bikes $932,000 $268,000 $404,000 $ 260,000 460,000 112,000 193,000 155,000 472,000 156,000 211,000 105,000 Dirt Mountain Bikes Bikes 69,600 8,400 40,600 43,200 20,200 20,600 7,500 15,500 115,300 40,400 38,300 36,600 186,400 53,600 80,800 52,000 414,500 122,600 167,200 124,700 $ 57,500 $33,400 $ 43,800 $(19,700) 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.