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 ixed expenses Total fixed expenses Net operating income (loss) "Allocated on the basis of sales dollars. Total Dirt Bikes $ 924,000 479,000 445,000 $ 268,000 115,000 153,000 Mountain Bikes $ 401,000 Racing Bikes 205,000 $ 255,000 159,000 196,000 96,000 69,700 8,400 40,800 20,500 43,800 20,500 7,700 15,600 115,800 40,500 38,300 37,000 184,800 53,600 80,200 51,000 414,100 123,000 167,000 $ 30,900 $ 30,000 $ 29,000 124,100 $ (28,100) Os 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.