The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 924,000 $ 263,000 $ 402,000 $ 259,000 Variable manufacturing and selling expenses 473,000 111,000 208,000 154,000 Contribution margin 451,000 152,000 194,000 105,000 Fixed expenses: Advertising, traceable 68,900 8,200 40,200 20,500 Depreciation of special equipment 44,400 21,000 7,500 15,900 Salaries of product-line managers 116,200 40,900 38,300 37,000 Allocated common fixed expenses* 184,800 52,600 80,400 51,800 Total fixed expenses 414,300 122,700 166,400 125,200 Net operating income (loss) $ 36,700 $ 29,300 $ 27,600 $ (20,200) *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.