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: Mountain Total Dirt Bikes Bikes Racing Bikes Sales $ 921, 000 $ 262, 000 $ 409, 000 $ 250, 000 Variable manufacturing and selling expenses 467, 000 112, 000 203, 000 152, 000 Contribution margin 454, 000 150, 000 206, 000 98, 000 Fixed expenses: Advertising, traceable 69, 600 8, 500 40, 900 20, 200 Depreciation of special equipment 43 , 900 20, 400 7, 600 15, 900 Salaries of product-line managers 115, 000 40, 500 38, 200 36, 300 Allocated common fixed expenses* 184, 200 52, 400 81, 800 50, 000 Total fixed expenses 412, 700 121, 800 168, 500 122, 400 Net operating income (loss) $ 41, 300 $ 28, 200 $ 37,500 $ (24, 400) *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