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 $ 931,000 481,000 450,000 Dirt Bikes $ 266,000 117,000 149,000 Mountain Bikes $ 407,000 210,000 Racing Bikes $ 258,000 154,000 197,000 104,000 70,300 8,800 40,500 21,000 43,700 20,500 7,700 15,500 113,800 40,400 38,100 35,300 186,200 53,200 81,400 51,600 414,000 122,900 167,700 123,400 $ 36,000 $ 26,100 $ 29,300 $ (19,400) 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.