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	$	926,000		$	266,000		$	402,000		$	258,000
Variable manufacturing and selling expenses		471,000			115,000			203,000			153,000
Contribution margin		455,000			151,000			199,000			105,000
Fixed expenses:
Advertising, traceable		70,100			8,900			40,800			20,400
Depreciation of special equipment		43,200			20,400			7,200			15,600
Salaries of product-line managers		113,800			40,200			38,300			35,300
Allocated common fixed expenses*		185,200			53,200			80,400			51,600
Total fixed expenses		412,300			122,700			166,700			122,900
Net operating income (loss)	$	42,700		$	28,300		$	32,300		$	(17,900)

*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.