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	$	917,000		$	265,000		$	401,000		$	251,000
Variable manufacturing and selling expenses		470,000			112,000			201,000			157,000
Contribution margin		447,000			153,000			200,000			94,000
Fixed expenses:
Advertising, traceable		70,400			8,600			41,000			20,800
Depreciation of special equipment		43,900			20,800			7,200			15,900
Salaries of product-line managers		115,800			40,900			38,800			36,100
Allocated common fixed expenses*		183,400			53,000			80,200			50,200
Total fixed expenses		413,500			123,300			167,200			123,000
Net operating income (loss)	$	33,500		$	29,700		$	32,800		$	(29,000)

*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.