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	$	928,000		$	263,000		$	409,000		$	256,000
Variable manufacturing and selling expenses		455,000			115,000			190,000			150,000
Contribution margin		473,000			148,000			219,000			106,000
Fixed expenses:
Advertising, traceable		69,900			8,500			40,600			20,800
Depreciation of special equipment		43,900			20,600			7,300			16,000
Salaries of product-line managers		115,700			40,700			38,600			36,400
Allocated common fixed expenses*		185,600			52,600			81,800			51,200
Total fixed expenses		415,100			122,400			168,300			124,400
Net operating income (loss)	$	57,900		$	25,600		$	50,700		$	(18,400)

*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.