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		$	265,000		$	406,000		$	253,000
Variable manufacturing and selling expenses		477,000			117,000			209,000			151,000
Contribution margin		447,000			148,000			197,000			102,000
Fixed expenses:
Advertising, traceable		69,600			8,400			41,000			20,200
Depreciation of special equipment		43,000			20,400			7,400			15,200
Salaries of product-line managers		113,600			40,000			38,500			35,100
Allocated common fixed expenses*		184,800			53,000			81,200			50,600
Total fixed expenses		411,000			121,800			168,100			121,100
Net operating income (loss)	$	36,000		$	26,200		$	28,900		$	(19,100)

*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.