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) Total Dirt Bikes Mountain Bikes Racing Bikes $ 935,000 $268,000 $ 408,000 $ 259,000 460,000 116,000 191,000 153,000 475,000 152,000 217,000 106,000 69,500 8,800 43,800 20,100 40,600 20,100 7,800 15,900 115,100 40,400 38,200 36,500 187,000 53,600 81,600 51,800 415,400 122,900 168,200 124,300 $ 59,600 $ 29,100 $ 48,800 $(18,300) *Allocated on the basis of sales dollars. 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.