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 $ 935,000 476,000 459,000 $270,000 119,000 151,000 Dirt Bikes Mountain Bikes $ 406,000 203,000 203,000 Racing Bikes $ 259,000 154,000 105,000 69,200 8,500 40,400 20,300 43,800 20,400 7,700 15,700 115,900 40,200 38,800 36,900 187,000 54,000 415,900 123,100 81,200 168,100 51,800 124,700 $ 43,100 $ 27,900 $ 34,900 $ (19,700) 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.