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 $ 926,000 Dirt Bikes $270,000 111,000 Total Mountain Bikes $ 402,000 Racing Bikes $254,000 472,000 454,000 159,000 208,000 194,000 153,000 101,000 69,800 8,300 41,000 20,500 44,000 20,400 7,900 15,700 114,700 40,700 38,600 35,400 185,200 54,000 80,400 50,800 413,700 123,400 167,900 122,400 $ 40,300 $ 35,600 $26,100 $ (21,400) Net operating income (loss) "Allocated on the basis of sales dollars. 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