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	$	922,000		$	263,000		$	409,000		$	250,000
Variable manufacturing and selling expenses		470,000			115,000			198,000			157,000
Contribution margin		452,000			148,000			211,000			93,000
Fixed expenses:
Advertising, traceable		69,900			8,200			41,000			20,700
Depreciation of special equipment		44,200			20,700			7,800			15,700
Salaries of product-line managers		114,800			40,800			38,600			35,400
Allocated common fixed expenses*		184,400			52,600			81,800			50,000
Total fixed expenses		413,300			122,300			169,200			121,800
Net operating income (loss)	$	38,700		$	25,700		$	41,800		$	(28,800)

*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.