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 $930,000 Dirt Bikes $ 267,000 463,000 467,000 115,000 152,000 Mountain Bikes $ 404,000 191,000 213,000 Racing Bikes $ 259,000 157,000 102,000 69,000 8,300 40,400 20,300 43,300 20,200 7,300 15,800 115,900 40,900 38,300 36,700 186,000 53,400 80,800 51,800 414,200 122,800 166,800 124,600 $ 52,800 $ 29,200 $ 46,200 $ (22,600) 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.