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	$	927,000		$	269,000		$	401,000		$	257,000
Variable manufacturing and selling expenses		468,000			117,000			198,000			153,000
Contribution margin		459,000			152,000			203,000			104,000
Fixed expenses:
Advertising, traceable		70,100			8,800			40,500			20,800
Depreciation of special equipment		43,000			20,200			7,400			15,400
Salaries of product-line managers		114,700			40,200			39,000			35,500
Allocated common fixed expenses*		185,400			53,800			80,200			51,400
Total fixed expenses		413,200			123,000			167,100			123,100
Net operating income (loss)	$	45,800		$	29,000		$	35,900		$	(19,100)

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.