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 $ 926,000 Dirt Bikes $ 262,000 113,000 149,000 Mountain Bikes $ 406,000 192,000 214,000 Racing Bikes $ 258,000 151,000 456,000 470,000 107,000 69,400 8,900 40,200 20,300 43,900 20,800 7,900 15,200 115,900 41,000 38,100 36,800 185,200 52,400 81,200 51,600 414,400 123,100 167,400 123,900 $ 55,600 $ 25,900 $ 46,600 $ (16,900) 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.