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 $ 929,000 470,000 Dirt Bikes $ 261,000 120,000 Mountain Bikes Racing Bikes $ 410,000 $ 258,000 193,000 157,000 459,000 141,000 217,000 101,000 69,500 8,500 40,200 20,800 43,200 20,500 7,500 15,200 115,400 40,700 38,200 36,500 185,800 52,200 82,000 51,600 413,900 121,900 167,900 124,100 $ 45,100 $ 19,100 $ 49,100 $ (23,100) 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.