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 $ 933,000 Dirt Bikes 477,000 456,000 $ 268,000 117,000 151,000 Mountain Bikes $ 408,000 202,000 Racing Bikes $ 257,000 158,000 206,000 99,000 69,600 8,800 40,500 20,300 43,900 20,500 7,900 15,500. 114,500 40,600 38,700 35,200 186,600 53,600 81,600 51,400 414,600 123,500 168,700 122,400 $ 41,400 $ 27,500 $ 37,300 $ (23,400) 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.