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	$ 264,000	$ 410,000	$ 255,000
Variable manufacturing and selling expenses	476,000	118,000	207,000	151,000
Contribution margin	453,000	146,000	203,000	104,000
Fixed expenses:
Advertising, traceable	69,200	8,200	40,900	20,100
Depreciation of special equipment	43,200	20,300	7,400	15,500
Salaries of product-line managers	114,600	40,600	38,000	36,000
Allocated common fixed expenses*	185,800	52,800	82,000	51,000
Total fixed expenses	412,800	121,900	168,300	122,600
Net operating income (loss)	$ 40,200	$ 24,100	$ 34,700	$ (18,600)

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.

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.