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 $ 923,000 475,000 448,000 Dirt Bikes $ 261,000 115,000 146,000 Mountain Bikes $ 406,000 205,000 Racing Bikes $ 256,000 155,000 201,000 101,000 70,600 8,700 41,000 20,900 44,000 20,700 7,700 15,600 115,100 40,900 38,700 35,500 184,600 52,200 81,200 51,200 414,300 122,500 168,600 123,200 $ 33,700 $ 23,500 $ 32,400 $ (22,200) 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.