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		$	263,000		$	401,000		$	260,000
Variable manufacturing and selling expenses		478,000			118,000			201,000			159,000
Contribution margin		446,000			145,000			200,000			101,000
Fixed expenses:
Advertising, traceable		70,700			9,000			40,800			20,900
Depreciation of special equipment		43,600			20,600			7,300			15,700
Salaries of product-line managers		114,500			40,500			38,100			35,900
Allocated common fixed expenses*		184,800			52,600			80,200			52,000
Total fixed expenses		413,600			122,700			166,400			124,500
Net operating income (loss)	$	32,400		$	22,300		$	33,600		$	(23,500)

*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.