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 $ 927,000 $ 268,000 $ 404,000 $ 255,000 Variable manufacturing and selling expenses 478,000 120,000 199,000 159,000 Contribution margin 449,000 148,000 205,000 96,000 Fixed expenses: Advertising, traceable 70,000 8,600 40,700 20,700 Depreciation of special equipment 43,700 20,200 7,700 15,800 Salaries of product-line managers 116,100 40,900 38,500 36,700 Allocated common fixed expenses* 185,400 53,600 80,800 51,000 Total fixed expenses 415,200 123,300 167,700 124,200 Net operating income (loss) $ 33,800 $ 24,700 $ 37,300 $ (28,200) *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.