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 $ 926,000 472,000 454,000 Dirt Bikes $ 265,000 111,000 154,000 Mountain Bikes $ 409,000 201,000 208,000 Racing Bikes $ 252,000 160,000 92,000 70,300 8,800 40,800 20,700 44,200 20,700 7,700 15,800 115,500 40,900 38,900 35,700 185,200 53,000 81,800 50,400 415,200 123,400 169,200 122,600 $ 38,800 $ 30,600 $ 38,800 $ (30,600) 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.