he 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	$	936,000		$	267,000		$	410,000		$	259,000
Variable manufacturing and selling expenses		467,000			111,000			202,000			154,000
Contribution margin		469,000			156,000			208,000			105,000
Fixed expenses:
Advertising, traceable		69,900			8,300			40,800			20,800
Depreciation of special equipment		43,900			21,000			7,700			15,200
Salaries of product-line managers		115,600			41,000			38,300			36,300
Allocated common fixed expenses*		187,200			53,400			82,000			51,800
Total fixed expenses		416,600			123,700			168,800			124,100
Net operating income (loss)	$	52,400		$	32,300		$	39,200		$	(19,100)

*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:

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.