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	$ 920,000	$ 263,000	$ 404,000	$ 253,000
Variable manufacturing and selling expenses	466,000	110,000	204,000	152,000
Contribution margin	454,000	153,000	200,000	101,000
Fixed expenses:
Advertising, traceable	69,000	8,200	40,700	20,100
Depreciation of special equipment	43,600	20,200	7,700	15,700
Salaries of product-line managers	114,400	40,100	38,200	36,100
Allocated common fixed expenses*	184,000	52,600	80,800	50,600
Total fixed expenses	411,000	121,100	167,400	122,500
Net operating income (loss)	$ 43,000	$ 31,900	$ 32,600	$ (21,500)

*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:

What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

Should the production and sale of racing bikes be discontinued?

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.