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	$931,000	$268,000	$ 408,000	$ 255,000
Variable manufacturing and selling expenses	475,000	117,000	202,000	156,000
Contribution margin	456,000	151,000	206,000	99,000
Fixed expenses:
Advertising, traceable	69,400	8,600	40,200	20,600
Depreciation of special equipment	43,900	20,100	7,800	16,000
Salaries of product-line managers	115,400	40,700	38,900	35,800
Allocated common fixed expenses*	186,200	53,600	81,600	51,000
Total fixed expenses	414,900	123,000	168,500	123,400
Net operating income (loss)	41,100	28,000	37,500	-24,400

*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.

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.