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	$	922,000		$	263,000		$	400,000		$	259,000
Variable manufacturing and selling expenses		475,000			117,000			205,000			153,000
Contribution margin		447,000			146,000			195,000			106,000
Fixed expenses:
Advertising, traceable		69,200			8,400			40,500			20,300
Depreciation of special equipment		43,800			20,800			7,800			15,200
Salaries of product-line managers		115,100			40,600			38,600			35,900
Allocated common fixed expenses*		184,400			52,600			80,000			51,800
Total fixed expenses		412,500			122,400			166,900			123,200
Net operating income (loss)	$	34,500		$	23,600		$	28,100		$	(17,200)

*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.