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 443,000 $ 266,000 115,000 151,000 Mountain Bikes $ 402,000 209,000 Racing Bikes $ 255,000 156,000 193,000 99,000 69,600 8,500 40,500 20,600 43,900 20,500 7,400 16,000 116,000 40,100 39,000 36,900 184,600 53,200 80,400 51,000 414,100 122,300 167,300 124,500 $ 28,900 $ 28,700 $ 25,700 $ (25,500) 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 $ 923,000 480,000 Net operating income (loss) *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.