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	$	934,000		$	267,000		$	407,000		$	260,000
Variable manufacturing and selling expenses		483,000			118,000			210,000			155,000
Contribution margin		451,000			149,000			197,000			105,000
Fixed expenses:
Advertising, traceable		69,900			8,900			40,900			20,100
Depreciation of special equipment		43,700			20,800			7,600			15,300
Salaries of product-line managers		115,100			40,500			38,900			35,700
Allocated common fixed expenses*		186,800			53,400			81,400			52,000
Total fixed expenses		415,500			123,600			168,800			123,100
Net operating income (loss)	$	35,500		$	25,400		$	28,200		$	(18,100)

*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.