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	$	929,000		$	266,000		$	407,000		$	256,000
Variable manufacturing and selling expenses		471,000			119,000			194,000			158,000
Contribution margin		458,000			147,000			213,000			98,000
Fixed expenses:
Advertising, traceable		69,300			8,500			40,300			20,500
Depreciation of special equipment		43,600			20,800			7,200			15,600
Salaries of product-line managers		114,700			40,700			38,500			35,500
Allocated common fixed expenses*		185,800			53,200			81,400			51,200
Total fixed expenses		413,400			123,200			167,400			122,800
Net operating income (loss)	$	44,600		$	23,800		$	45,600		$	(24,800)

*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.