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	$ 918,000	$ 261,000	$ 407,000	$ 250,000
Variable manufacturing and selling expenses	466,000	117,000	194,000	155,000
Contribution margin	452,000	144,000	213,000	95,000
Fixed expenses:
Advertising, traceable	70,300	8,600	41,000	20,700
Depreciation of special equipment	43,600	20,300	7,300	16,000
Salaries of product-line managers	115,500	40,800	38,100	36,600
Allocated common fixed expenses*	183,600	52,200	81,400	50,000
Total fixed expenses	413,000	121,900	167,800	123,300
Net operating income (loss)	$ 39,000	$ 22,100	$ 45,200	$ (28,300)

*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:

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.