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 $ 915,000 471,000 444,000 Dirt Bikes $ 264,000 110,000 154,000 Mountain Bikes $ 401,000 207,000 194,000 Racing Bikes $ 250,000 154,000 96,000 70,100 8,600 40,800 20,700 43,400 20,200 7,300 15,900 114,500 40,600 38,800 35,100 183,000 52,800 80,200 50,000 411,000 122,200 167,100 121,700 $ 33,000 $ 31,800 $ 26,900 $ (25,700) 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.