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. Total Dirt Bikes Sales $ 928,000 Variable manufacturing and selling expenses 459,000 $ 262,000 111,000 Mountain Bikes $ 408,000 192,000 Racing Bikes $ 258,000 156,000 Contribution margin Fixed expenses: Advertising, traceable 469,000 151,000 216,000 102,000 69,300 8,900 40,200 20,200 Depreciation of special equipment Allocated common fixed expenses Net operating income (loss) "Allocated on the basis of sales dollars. 43,900 20,900 7,400 15,600 Salaries of product-line managers Total fixed expenses 114,400 40,400 38,900 35,100 185,600 52,400 81,600 51,600 413,200 122,600 168,100 122,500 $ 55,800 $ 28,400 $ 47,900 $ (20,500) 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.