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 $ 934,000 472,000 462,000 Dirt Bikes $ 269,000 119,000 150,000 Mountain Bikes $ 407,000 197,000 Racing Bikes $ 258,000 156,000 210,000 102,000 69,100 8,700 40,100 20,300 43,400 20,900 7,200 15,300 114,600 40,100 38,200 36,300 186,800 53,800 81,400 51,600 413,900 123,500 166,900 123,500 $ 48,100 $ 26,500 $ 43,100 $ (21,500) 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.