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 $ 265,000 $ 402,000 $ 258,000 Variable manufacturing and selling expenses 476,000 115,000 205,000 156,000 Contribution margin 449,000 150,000 197,000 102,000 Fixed expenses: Advertising, traceable 69,500 8,700 40,500 20,300 Depreciation of special equipment 43,600 20,600 7,300 15,700 Salaries of product-line managers 116,200 40,700 38,700 36,800 Allocated common fixed expenses* 185,000 53,000 80,400 51,600 Total fixed expenses 414,300 123,000 166,900 124,400 Net operating income (loss) $ 34,700 $ 27,000 $ 30,100 $ (22,400) *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.