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 $ 925,000 $ 262,000 $ 409,000 $ 254,000 Variable manufacturing and selling expenses 479,000 118,000 202,000 159,000 Contribution margin 446,000 144,000 207,000 95,000 Fixed expenses: Advertising, traceable 69,500 8,300 40,800 20,400 Depreciation of special equipment 43,100 20,500 7,200 15,400 Salaries of product-line managers 115,400 40,600 38,600 36,200 Allocated common fixed expenses* 185,000 52,400 81,800 50,800 Total fixed expenses 413,000 121,800 168,400 122,800 Net operating income (loss) $ 33,000 $ 22,200 $ 38,600 $ (27,800) *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.