he 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 $ 267,000 $ 402,000 $ 256,000 Variable manufacturing and selling expenses 455,000 112,000 192,000 151,000 Contribution margin 470,000 155,000 210,000 105,000 Fixed expenses: Advertising, traceable 70,000 9,000 40,300 20,700 Depreciation of special equipment 43,700 20,600 7,400 15,700 Salaries of product-line managers 115,900 40,800 38,300 36,800 Allocated common fixed expenses* 185,000 53,400 80,400 51,200 Total fixed expenses 414,600 123,800 166,400 124,400 Net operating income (loss) $ 55,400 $ 31,200 $ 43,600 $ (19,400) *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.