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 Mountain Racing Bikes Bikes $929,000 $268,000 $406,000 $255,000 467,000 111,000 205,000 151,000 462,000 157,000 201,000 104,000 70,000 8,800 40,300 20,900 44,000 20,700 7,900 15,400 115,600 41,000 38,700 35,900 185,800 53,600 81,200 51,000 415,400 124,100 168,100 123,200 $ 46,600 $ 32,900 $ 32,900 $(19,200) 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.