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 $ 928,000 483,000 445,000 Dirt Bikes $267,000 116,000 151,000 Mountain Bikes $405,000 209,000 196,000 Racing Bikes $ 256,000 158,000 98,000 70,400 8,400 41,000 21,000 43,300 20,400 7,400 15,500 115,000 40,800 38,700 35,500 185,600 53,400 81,000 51,200 414,300 123,000 168,100 123,200 $ 30,700 $ 28,000 $ 27,900 $ (25,200) 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.