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	$	923,000		$	261,000		$	407,000		$	255,000
Variable manufacturing and selling expenses		468,000			117,000			199,000			152,000
Contribution margin		455,000			144,000			208,000			103,000
Fixed expenses:
Advertising, traceable		69,700			8,500			40,300			20,900
Depreciation of special equipment		43,300			20,600			7,100			15,600
Salaries of product-line managers		113,700			40,600			38,000			35,100
Allocated common fixed expenses*		184,600			52,200			81,400			51,000
Total fixed expenses		411,300			121,900			166,800			122,600
Net operating income (loss)	$	43,700		$	22,100		$	41,200		$	(19,600)

*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.