The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) Dirt Total $917,000 Mountain Racing Bikes Bikes Bikes $265,000 $401,000 $251,000 475,000 120,000 197,000 158,000 442,000 145,000 204,000 93,000 70,000 8,900 40,300 20,800 43,900 20,300 7,600 16,000 114,500 40,800 38,300 35,400 183,400 53,000 80,200 50,200 411,800 123,000 166,400 122,400 $ 30,200 $ 22,000 $ 37,600 $(29,400) *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.