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 $ 933,000 $ 268,000 $ 406,000 $ 259,000 Variable manufacturing and selling expenses 462,000 112,000 196,000 154,000 Contribution margin 471,000 156,000 210,000 105,000 Fixed expenses: Advertising, traceable 70,100 8,500 41,000 20,600 Depreciation of special equipment 42,500 20,100 7,100 15,300 Salaries of product-line managers 114,900 40,300 38,800 35,800 Allocated common fixed expenses* 186,600 53,600 81,200 51,800 Total fixed expenses 414,100 122,500 168,100 123,500 Net operating income (loss) $ 56,900 $ 33,500 $ 41,900 $ (18,500) *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.