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	$	916,000		$	263,000		$	402,000		$	251,000
Variable manufacturing and selling expenses		461,000			116,000			193,000			152,000
Contribution margin		455,000			147,000			209,000			99,000
Fixed expenses:
Advertising, traceable		69,300			8,600			40,400			20,300
Depreciation of special equipment		43,600			20,600			7,300			15,700
Salaries of product-line managers		115,500			40,900			38,500			36,100
Allocated common fixed expenses*		183,200			52,600			80,400			50,200
Total fixed expenses		411,600			122,700			166,600			122,300
Net operating income (loss)	$	43,400		$	24,300		$	42,400		$	(23,300)

*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.