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 $ 920,000 $ 262,000 $ 406,000 $ 252,000 Variable manufacturing and selling expenses 478,000 115,000 208,000 155,000 Contribution margin 442,000 147,000 198,000 97,000 Fixed expenses: Advertising, traceable 70,100 8,800 40,500 20,800 Depreciation of special equipment 44,500 21,000 7,500 16,000 Salaries of product-line managers 114,200 40,000 38,700 35,500 Allocated common fixed expenses* 184,000 52,400 81,200 50,400 Total fixed expenses 412,800 122,200 167,900 122,700 Net operating income (loss) $ 29,200 $ 24,800 $ 30,100 $ (25,700) *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.