The Miller 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	$	932,000		$	265,000		$	410,000		$	257,000
Variable manufacturing and selling expenses		461,000			115,000			191,000			155,000
Contribution margin		471,000			150,000			219,000			102,000
Fixed expenses:
Advertising, traceable		70,200			8,700			40,900			20,600
Depreciation of special equipment		43,500			20,300			7,700			15,500
Salaries of product-line managers		113,900			40,500			38,100			35,300
Allocated common fixed expenses*		186,400			53,000			82,000			51,400
Total fixed expenses		414,000			122,500			168,700			122,800
Net operating income (loss)	$	57,000		$	27,500		$	50,300		$	(20,800)

*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.