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	$	920,000		$	263,000		$	401,000		$	256,000
Variable manufacturing and selling expenses		469,000			117,000			199,000			153,000
Contribution margin		451,000			146,000			202,000			103,000
Fixed expenses:
Advertising, traceable		69,000			8,200			40,200			20,600
Depreciation of special equipment		43,100			20,500			7,400			15,200
Salaries of product-line managers		115,100			40,600			38,300			36,200
Allocated common fixed expenses*		184,000			52,600			80,200			51,200
Total fixed expenses		411,200			121,900			166,100			123,200
Net operating income (loss)	$	39,800		$	24,100		$	35,900		$	(20,200)

*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.