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	$	921,000		$	262,000		$	408,000		$	251,000
Variable manufacturing and selling expenses		472,000			115,000			199,000			158,000
Contribution margin		449,000			147,000			209,000			93,000
Fixed expenses:
Advertising, traceable		69,700			8,900			40,100			20,700
Depreciation of special equipment		43,600			20,600			7,400			15,600
Salaries of product-line managers		114,700			40,600			39,000			35,100
Allocated common fixed expenses*		184,200			52,400			81,600			50,200
Total fixed expenses		412,200			122,500			168,100			121,600
Net operating income (loss)	$	36,800		$	24,500		$	40,900		$	(28,600)

*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.