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	$	924,000		$	269,000		$	403,000		$	252,000
Variable manufacturing and selling expenses		479,000			115,000			207,000			157,000
Contribution margin		445,000			154,000			196,000			95,000
Fixed expenses:
Advertising, traceable		68,900			8,500			40,100			20,300
Depreciation of special equipment		44,400			21,000			8,000			15,400
Salaries of product-line managers		114,700			40,400			38,100			36,200
Allocated common fixed expenses*		184,800			53,800			80,600			50,400
Total fixed expenses		412,800			123,700			166,800			122,300
Net operating income (loss)	$	32,200		$	30,300		$	29,200		$	(27,300)

*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.