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 $ 931,000 Dirt Bikes: $268,000 Mountain Bikes $ 407,000 Racing Bikes $256,000 455,000 110,000 476,000 158,000 195,000 212,000 150,000 106,000 69,300 8,300 40,700 20,300 44,200 20,500 7,700 16,000 115,300 41,000 38,300 36,000 186,200. 53,600 81,400 51,200 415,000 123,400 168,100 123,500 $ 61,000 $ 34,600 $ 43,900 $ (17,500) 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-rua profitability of the various product lines.