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	$	914,000		$	261,000		$	402,000		$	251,000
Variable manufacturing and selling expenses		469,000			119,000			191,000			159,000
Contribution margin		445,000			142,000			211,000			92,000
Fixed expenses:
Advertising, traceable		69,300			8,200			40,200			20,900
Depreciation of special equipment		43,700			20,500			7,400			15,800
Salaries of product-line managers		115,400			40,400			38,600			36,400
Allocated common fixed expenses*		182,800			52,200			80,400			50,200
Total fixed expenses		411,200			121,300			166,600			123,300
Net operating income (loss)	$	33,800		$	20,700		$	44,400		$	(31,300)

*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.