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	$	931,000		$	268,000		$	405,000		$	258,000
Variable manufacturing and selling expenses		481,000			116,000			210,000			155,000
Contribution margin		450,000			152,000			195,000			103,000
Fixed expenses:
Advertising, traceable		69,400			8,300			40,600			20,500
Depreciation of special equipment		43,900			20,900			7,500			15,500
Salaries of product-line managers		115,500			40,900			38,000			36,600
Allocated common fixed expenses*		186,200			53,600			81,000			51,600
Total fixed expenses		415,000			123,700			167,100			124,200
Net operating income (loss)	$	35,000		$	28,300		$	27,900		$	(21,200)

*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.