The 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		$	262,000		$	404,000		$	254,000
Variable manufacturing and selling expenses		481,000			118,000			204,000			159,000
Contribution margin		439,000			144,000			200,000			95,000
Fixed expenses:
Advertising, traceable		69,900			8,900			40,200			20,800
Depreciation of special equipment		44,300			20,800			7,800			15,700
Salaries of product-line managers		115,500			40,100			38,500			36,900
Allocated common fixed expenses*		184,000			52,400			80,800			50,800
Total fixed expenses		413,700			122,200			167,300			124,200
Net operating income (loss)	$	25,300		$	21,800		$	32,700		$	(29,200)

*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.