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 Dirt Bikes $ 918,000 479,000 $ 264,000 118,000 Mountain Bikes $ 401,000 Racing Bikes $ 253,000 208,000 153,000 439,000 146,000 193,000 100,000 69,200 8,100 40,900 20,200 44,100 20,700 7,900 15,500 114,500 40,100 38,300 36,100 183,600 52,800 80,200 50,600 411,400 121,700 167,300 122,400 $ 27,600 $ 24,300 $ 25,700 $ (22,400) 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.