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 $ 924,000 477,000 447,000 $ 267,000 116,000 151,000 Mountain Bikes $ 407,000 204,000 203,000 Racing Bikes $ 250,000 157,000 93,000 70,600 9,000 40,800 20,800 43,400 20,300 7,300 15,800 115,700 40,800 38,200 36,700 184,800 53,400 81,400 50,000 414,500 123,500 167,700 123,300 $ 32,500 $ 27,500 $ 35,300 $ (30,300) 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.