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 $ 917,000 $ 263,000 $ 403,000 $ 251,000 Variable manufacturing and selling expenses 477,000 118,000 207,000 152,000 Contribution margin 440,000 145,000 196,000 99,000 Fixed expenses: Advertising, traceable 70,100 8,500 40,600 21,000 Depreciation of special equipment 43,700 20,400 7,800 15,500 Salaries of product-line managers 115,600 40,500 38,600 36,500 Allocated common fixed expenses* 183,400 52,600 80,600 50,200 Total fixed expenses 412,800 122,000 167,600 123,200 Net operating income (loss) $ 27,200 $ 23,000 $ 28,400 $ (24,200) *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.