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	$	927,000		$	268,000		$	408,000		$	251,000
Variable manufacturing and selling expenses		475,000			119,000			202,000			154,000
Contribution margin		452,000			149,000			206,000			97,000
Fixed expenses:
Advertising, traceable		69,800			8,200			40,900			20,700
Depreciation of special equipment		44,100			20,800			7,800			15,500
Salaries of product-line managers		115,800			40,200			38,600			37,000
Allocated common fixed expenses*		185,400			53,600			81,600			50,200
Total fixed expenses		415,100			122,800			168,900			123,400
Net operating income (loss)	$	36,900		$	26,200		$	37,100		$	(26,400)

*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.