The Regal Cycle Company manufactures three types of bicyclesa 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 $ 914,000 468,000 446,000 Dirt Bikes $ 263,000 111,000 152,000 Mountain Bikes $ 401,000 201,000 Racing Bikes $ 250,000 156,000 200,000 94,000 70,300 8,800 40,700 20,800 43,300 20,600 7,200 15,500 114,800 40,900 38,800 35,100 182,800 52,600 80,200 50,000 411,200 122,900 166,900 121,400 $ 34,800 $ 29,100 $ 33,100 $ (27,400) 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.