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	$	929,000		$	265,000		$	405,000		$	259,000
Variable manufacturing and selling expenses		461,000			110,000			192,000			159,000
Contribution margin		468,000			155,000			213,000			100,000
Fixed expenses:
Advertising, traceable		70,100			9,000			40,600			20,500
Depreciation of special equipment		44,200			20,900			7,800			15,500
Salaries of product-line managers		114,000			40,200			38,600			35,200
Allocated common fixed expenses*		185,800			53,000			81,000			51,800
Total fixed expenses		414,100			123,100			168,000			123,000
Net operating income (loss)	$	53,900		$	31,900		$	45,000		$	(23,000)

*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:

a. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

b. Should the production and sale of racing bikes be discontinued?

c. 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.