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 connon fixed expenses Total fixed expenses Net operating income (loss) "Allocated on the basis of sales dollars. Total $930,000 458,000 472,000 Dirt Bikes $268,000 116,000 152,000 Mountain Bikes $ 403,000 191,000 212,000 Racing Bikes $ 259,000 151,000 108,000 70,000 8,900 41,000 20,100 43,500 20,200 7,800 15,500 115,000 40,500 38,300 36,200 186,000 53,600 88,600 51,800 414,500 123,200 167,700 123,600 $ 57,500 $ 28,800 $ 44,300 $ (15,600) 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.