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		$	267,000		$	403,000		$	250,000
Variable manufacturing and selling expenses		459,000			111,000			190,000			158,000
Contribution margin		461,000			156,000			213,000			92,000
Fixed expenses:
Advertising, traceable		69,100			8,700			40,100			20,300
Depreciation of special equipment		44,000			20,600			7,700			15,700
Salaries of product-line managers		115,100			40,800			38,000			36,300
Allocated common fixed expenses*		184,000			53,400			80,600			50,000
Total fixed expenses		412,200			123,500			166,400			122,300
Net operating income (loss)	$	48,800		$	32,500		$	46,600		$	(30,300)

*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.