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 Mountain Racing Total Bikes Bikes Bikes Sales $918,000 $262,000 $403,000 $ 253,000 Variable manufacturing and selling 478,000 120,000 205,000 expenses 153,000 Contribution margin 440,000 142,000 198,000 100,000 Fixed expenses: Advertising, traceable 69,700 8,400 40,400 20,900 Depreciation of special equipment 43,400 20,700 7,500 15, 200 Salaries of product-line managers 115,300 40,500 38,800 36,000 Allocated common fixed expenses* 183,600 52,400 80,600 50,600 Total fixed expenses 412,000 122,000 167,300 122,700 Net operating income (loss) 28,000 $ 20,000 $ 30,700 $(22,700) "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