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 $ 934,000 $ 265,000 $ 409,000 $ 260,000 Variable manufacturing and selling expenses 470,000 117,000 194,000 159,000 Contribution margin 464,000 148,000 215,000 101,000 Fixed expenses: Advertising, traceable 70,200 9,000 40,700 20,500 Depreciation of special equipment 43,500 20,400 7,200 15,900 Salaries of product-line managers 114,100 40,000 38,700 35,400 Allocated common fixed expenses* 186,800 53,000 81,800 52,000 Total fixed expenses 414,600 122,400 168,400 123,800 Net operating income (loss) $ 49,400 $ 25,600 $ 46,600 $ (22,800) *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.