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: Mountain Racing Bikes Total Dirt Bikes Bikes $ 924,000 463,000 $ 265,000 114,000 $ 403,000 198,000 205,000 $ 256,000 151,000 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 461,000 151,000 105,000 8,300 20,100 40,400 53,000 121,800 $ 29,200 40,500 7,600 38,300 69,500 43,300 114,900 184,800 20,700 15,600 36,200 51,200 0,600 412,500 167,000 123,700 Net operating income (loss) $ 48,500 $ 38,000 $ (18,700) *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.