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 $ 925,000 $ 267,000 $ 406,000 $ 252,000 Variable manufacturing and selling expenses 460,000 116,000 191,000 153,000 Contribution margin 465,000 151,000 215,000 99,000 Fixed expenses: Advertising, traceable 69,800 8,500 40,800 20,500 Depreciation of special equipment 43,600 20,300 7,800 15,500 Salaries of product-line managers 114,200 40,200 38,900 35,100 Allocated common fixed expenses* 185,000 53,400 81,200 50,400 Total fixed expenses 412,600 122,400 168,700 121,500 Net operating income (loss) $ 52,400 $ 28,600 $ 46,300 $ (22,500) *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.