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: Dirt Bikes Mountain Racing Bikes Bikes Total Sales $ 927,000 $269,000 $401,000 $257,000 Variable manufacturing and selling 485,000 118,000 210,000 157,000 expenses 442,000 151,000 191,000 100,000 Contribution margin Fixed expenses: Advertising, traceable. 68,400 8,100 40,100 20, 200 43,800 20,400 8,000 15,400 114,400 40,500 38,100 35,800 Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses 185,400 53,800 80, 200 51,400 412,000 122,800 166,400 122,800 Net operating income (loss) $ 30,000 $ 28,200 $ 24,600 $(22,800) *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.