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	$	926,000		$	261,000		$	405,000		$	260,000
Variable manufacturing and selling expenses		477,000			113,000			209,000			155,000
Contribution margin		449,000			148,000			196,000			105,000
Fixed expenses:
Advertising, traceable		69,600			8,400			40,600			20,600
Depreciation of special equipment		43,700			20,600			7,300			15,800
Salaries of product-line managers		114,200			40,800			38,000			35,400
Allocated common fixed expenses*		185,200			52,200			81,000			52,000
Total fixed expenses		412,700			122,000			166,900			123,800
Net operating income (loss)	$	36,300		$	26,000		$	29,100		$	(18,800)

*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.