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 $ 404,000 $ 259,000 Variable manufacturing and selling expenses 468,000 119,000 198,000 151,000 Contribution margin 457,000 143,000 206,000 108,000 Fixed expenses: Advertising, traceable 69,200 8,100 41,000 20,100 Depreciation of special equipment 44,200 20,700 7,700 15,800 Salaries of product-line managers 114,200 40,600 38,100 35,500 Allocated common fixed expenses* 185,000 52,400 80,800 51,800 Total fixed expenses 412,600 121,800 167,600 123,200 Net operating income (loss) $ 44,400 $ 21,200 $ 38,400 $ (15,200) *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.