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 $ 926,000 Dirt Bikes $ 262,000 Mountain Bikes $410,000 Racing Bikes 479,000 447,000 120,000 142,000 201,000 209,000 $ 254,000 158,000 96,000 69,500 8,600 40,200 20,700 43,200 20,300 7,400 15,500 114,400 40,300 39,000 35,100 185,200 52,400 82,000 50,800 412,300 121,600 168,600 122,100 $ 34,700 $ 20,400 $ 40,400 $ (26,100) 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.