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 $ 929,000 $ 269,000 $ 408,000 $ 252,000 Variable manufacturing and selling expenses 464,000 117,000 194,000 153,000 Contribution margin 465,000 152,000 214,000 99,000 Fixed expenses: Advertising, traceable 69,500 8,500 40,900 20,100 Depreciation of special equipment 43,500 20,200 7,800 15,500 Salaries of product-line managers 116,600 40,900 38,700 37,000 Allocated common fixed expenses* 185,800 53,800 81,600 50,400 Total fixed expenses 415,400 123,400 169,000 123,000 Net operating income (loss) $ 49,600 $ 28,600 $ 45,000 $ (24,000) *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.