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 $925,000 Dirt Bikes $263,000 Mountain Bikes $ 408,000 466,000 113,000 459,000 150,000 193,000 215,000 Racing Bikes $ 254,000 160,000 94,000 70,000 8,700 41,000 20,300 43,200 20,800 7,200 15,200 114,000) 40,500 38,300 35,200 185,000 52,600 81,600 50,800 412,200 122,600 168,100 121,500 $ 46,800 $ 27,400 $ 46,900 $ (27,500) 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-run profitability of the various product lines.