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	$	925,000		$	267,000		$	401,000		$	257,000
Variable manufacturing and selling expenses		478,000			113,000			210,000			155,000
Contribution margin		447,000			154,000			191,000			102,000
Fixed expenses:
Advertising, traceable		69,000			8,200			40,600			20,200
Depreciation of special equipment		44,100			20,700			7,700			15,700
Salaries of product-line managers		115,700			40,700			38,800			36,200
Allocated common fixed expenses*		185,000			53,400			80,200			51,400
Total fixed expenses		413,800			123,000			167,300			123,500
Net operating income (loss)	$	33,200		$	31,000		$	23,700		$	(21,500)

*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.