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 Dirt Bikes Mountain Bikes Racing Bikes $ 925,000 473,000 $ 267,000 114,000 $ 408,000 $ 250,000 204,000 155,000 452,000 153,000 204,000 95,000 69,300 8,300 40,600 20,400 44,200 21,000 7,500 15,700 115,000 40,600 38,500 35,900 185,000 53,400 81,600 50,000 413,500 123,300 168,200 122,000 $ 38,500 $ 29,700 $ 35,800 $ (27,000) 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.