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	$	917,000		$	262,000		$	402,000		$	253,000
Variable manufacturing and selling expenses		474,000			115,000			206,000			153,000
Contribution margin		443,000			147,000			196,000			100,000
Fixed expenses:
Advertising, traceable		70,200			8,500			40,900			20,800
Depreciation of special equipment		44,500			20,900			7,900			15,700
Salaries of product-line managers		115,200			40,800			38,200			36,200
Allocated common fixed expenses*		183,400			52,400			80,400			50,600
Total fixed expenses		413,300			122,600			167,400			123,300
Net operating income (loss)	$	29,700		$	24,400		$	28,600		$	(23,300)

*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.