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 $ 922,000 $ 262,000 $ 404,000 $ 256,000 Variable manufacturing and selling expenses 467,000 116,000 195,000 156,000 Contribution margin 455,000 146,000 209,000 100,000 Fixed expenses: Advertising, traceable 69,500 8,900 40,400 20,200 Depreciation of special equipment 43,600 20,300 7,300 16,000 Salaries of product-line managers 114,500 40,800 38,500 35,200 Allocated common fixed expenses* 184,400 52,400 80,800 51,200 Total fixed expenses 412,000 122,400 167,000 122,600 Net operating income (loss) $ 43,000 $ 23,600 $ 42,000 $ (22,600) *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.