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:

TotalDirt BikesMountain BikesRacing BikesSales$935,000 $270,000 $408,000 $257,000 Variable manufacturing and selling expenses 467,000 111,000 206,000 150,000 Contribution margin 468,000 159,000 202,000 107,000 Fixed expenses: Advertising, traceable 69,300 8,400 40,400 20,500 Depreciation of special equipment 43,800 20,800 7,300 15,700 Salaries of product-line managers 114,300 40,600 38,300 35,400 Allocated common fixed expenses* 187,000 54,000 81,600 51,400 Total fixed expenses 414,400 123,800 167,600 123,000 Net operating income (loss)$53,600 $35,200 $34,400 $(16,000)

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.