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 $ 921,000 460,000 461,000 Dirt Bikes $ 262,000 116,000 146,000 Mountain Bikes $ 401,000 194,000 Racing Bikes $ 258,000 150,000 207,000 108,000 70,200 8,400 40,900 20,900 43,200 20,200 7,500 15,500 115,100 40,400 38,500 36,200 184,200 52,400 80,200 51,600 412,700 121,400 167,100 124,200 $ 48,300 $ 24,600 $ 39,900 $ (16,200) 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