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 $ 920,000 $ 264,000 $ 406,000 $ 250,000 Variable manufacturing and selling expenses 467,000 119,000 191,000 157,000 Contribution margin 453,000 145,000 215,000 93,000 Fixed expenses: Advertising, traceable 68,900 8,100 40,200 20,600 Depreciation of special equipment 43,500 20,200 7,400 15,900 Salaries of product-line managers 115,900 40,800 38,200 36,900 Allocated common fixed expenses* 184,000 52,800 81,200 50,000 Total fixed expenses 412,300 121,900 167,000 123,400 Net operating income (loss) $ 40,700 $ 23,100 $ 48,000 $ (30,400) *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.