The 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 $ 926,000 $ 266,000 $ 407,000 $ 253,000 Variable manufacturing and selling expenses 472,000 110,000 208,000 154,000 Contribution margin 454,000 156,000 199,000 99,000 Fixed expenses: Advertising, traceable 69,100 8,700 40,100 20,300 Depreciation of special equipment 44,000 20,600 7,500 15,900 Salaries of product-line managers 115,500 40,700 38,300 36,500 Allocated common fixed expenses* 185,200 53,200 81,400 50,600 Total fixed expenses 413,800 123,200 167,300 123,300 Net operating income (loss) $ 40,200 $ 32,800 $ 31,700 $ (24,300) *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.