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 $ 923,000 474,000 449,000 Dirt Bikes $ 265,000 116,000 149,000 Mountain Bikes $ 408,000 205,000 Racing Bikes $ 250,000 153,000 203,000 97,000 68,700 8,100 40,300 20,300 44,300 20,800 7,900 15,600 115,900 40,800 38,200 36,900 184,600 53,000 81,600 50,000 413,500 122,700 168,000 122,800 $ 35,500 $ 26,300 $ 35,000 $ (25,800) 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.