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	$	929,000		$	265,000		$	410,000		$	254,000
Variable manufacturing and selling expenses		474,000			117,000			206,000			151,000
Contribution margin		455,000			148,000			204,000			103,000
Fixed expenses:
Advertising, traceable		69,700			8,300			40,600			20,800
Depreciation of special equipment		43,900			20,800			7,500			15,600
Salaries of product-line managers		114,800			40,300			38,100			36,400
Allocated common fixed expenses*		185,800			53,000			82,000			50,800
Total fixed expenses		414,200			122,400			168,200			123,600
Net operating income (loss)	$	40,800		$	25,600		$	35,800		$	(20,600)

*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.