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		$	269,000		$	406,000		$	252,000
Variable manufacturing and selling expenses		464,000			112,000			196,000			156,000
Contribution margin		463,000			157,000			210,000			96,000
Fixed expenses:
Advertising, traceable		69,900			8,200			40,900			20,800
Depreciation of special equipment		44,200			20,900			7,600			15,700
Salaries of product-line managers		114,100			40,200			38,000			35,900
Allocated common fixed expenses*		185,400			53,800			81,200			50,400
Total fixed expenses		413,600			123,100			167,700			122,800
Net operating income (loss)	$	49,400		$	33,900		$	42,300		$	(26,800)

*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.