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	$	925,000		$	266,000		$	408,000		$	251,000
Variable manufacturing and selling expenses		481,000			119,000			205,000			157,000
Contribution margin		444,000			147,000			203,000			94,000
Fixed expenses:
Advertising, traceable		68,900			8,200			40,200			20,500
Depreciation of special equipment		43,700			20,800			7,800			15,100
Salaries of product-line managers		114,500			40,900			38,300			35,300
Allocated common fixed expenses*		185,000			53,200			81,600			50,200
Total fixed expenses		412,100			123,100			167,900			121,100
Net operating income (loss)	$	31,900		$	23,900		$	35,100		$	(27,100)

*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.