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	$	927,000		$	262,000		$	407,000		$	258,000
Variable manufacturing and selling expenses		477,000			117,000			207,000			153,000
Contribution margin		450,000			145,000			200,000			105,000
Fixed expenses:
Advertising, traceable		70,100			8,700			40,900			20,500
Depreciation of special equipment		43,300			20,200			7,600			15,500
Salaries of product-line managers		113,900			40,300			38,200			35,400
Allocated common fixed expenses*		185,400			52,400			81,400			51,600
Total fixed expenses		412,700			121,600			168,100			123,000
Net operating income (loss)	$	37,300		$	23,400		$	31,900		$	(18,000)

*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.