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 $ 923,000 $ 261,000 $ 404,000 $ 258,000 Variable manufacturing and selling expenses 472,000 117,000 203,000 152,000 Contribution margin 451,000 144,000 201,000 106,000 Fixed expenses: Advertising, traceable 69,200 8,400 40,500 20,300 Depreciation of special equipment 43,500 20,200 7,700 15,600 Salaries of product-line managers 114,100 40,600 38,400 35,100 Allocated common fixed expenses* 184,600 52,200 80,800 51,600 Total fixed expenses 411,400 121,400 167,400 122,600 Net operating income (loss) $ 39,600 $ 22,600 $ 33,600 $ (16,600) *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.