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 Dirt Bikes $ 918,000 460,000 458,000 $ 262,000 114,000 148,000 Mountain Bikes $ 401,000 194,000 207,000 Racing Bikes $ 255,000 152,000 103,000 69,700 8,200 40,700 20,800 43,800 20,500 7,300 16,000 116,000 40,800 38,600 36,600 183,600 52,400 80,200 51,000 413,100 121,900 166,800 124,400 $ 44,900 $ 26,100 $ 40,200 $ (21,400) 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