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 461,000 $ 266,000 117,000 149,000 Mountain Bikes $ 407,000 196,000 211,000 Racing Bikes $ 255,000 154,000 101,000 69,300 8,500 40,200 20,600 44,100 21,000 7,400 15,700 114,500 40,000 38,300 36,200 185,600 53,200 81,400 51,000 413,500 122,700 167,300 123,500 $ 47,500 $ 26,300 $ 43,700 $ (22,500) 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 Net operating income (loss) $ 928,000 467,000 "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.