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 $ 924,000 464,000 $ 264,000 Mountain Bikes $ 402,000 Racing Bikes $ 258,000 460,000 118,000 146,000 196,000 206,000 150,000 108,000 69,500 8,500 40,700 20,300 43,700 20,700 7,500 15,500 114,500 40,100 38,500 35,900 184,800 52,800 80,400 51,600 412,500 122,100 167,100 123,300 $ 47,500 $ 23,900 $ 38,900 $ (15,300) 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.