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 $ 939,000 $ 270,000 $ 410,000 $ 259,000 Variable manufacturing and selling expenses 479,000 112,000 209,000 158,000 Contribution margin 460,000 158,000 201,000 101,000 Fixed expenses: Advertising, traceable 69,300 8,500 40,700 20,100 Depreciation of special equipment 43,700 20,500 7,200 16,000 Salaries of product-line managers 115,300 40,600 38,600 36,100 Allocated common fixed expenses* 187,800 54,000 82,000 51,800 Total fixed expenses 416,100 123,600 168,500 124,000 Net operating income (loss) $ 43,900 $ 34,400 $ 32,500 $ (23,000) *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.