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 $ 928,000 463,000 465,000 Dirt Bikes $ 265,000 117,000 148,000 Mountain Bikes $ 407,000 193,000 Racing Bikes $ 256,000 214,000 153,000 103,000 69,500 8,300 40,900 20,300 43,500 20,700 7,200 15,600 114,400 40,600 38,300 35,500 185,600 53,000 81,400 51,200 413,000 122,600 167,800 122,600 $ 52,000 $ 25,400 $ 46,200 $ (19,600) 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. Complete this question by entering your answers in the tabs below.