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	$	922,000		$	262,000		$	401,000		$	259,000
Variable manufacturing and selling expenses		479,000			118,000			209,000			152,000
Contribution margin		443,000			144,000			192,000			107,000
Fixed expenses:
Advertising, traceable		69,300			8,900			40,100			20,300
Depreciation of special equipment		43,300			20,200			7,200			15,900
Salaries of product-line managers		115,400			40,600			38,700			36,100
Allocated common fixed expenses*		184,400			52,400			80,200			51,800
Total fixed expenses		412,400			122,100			166,200			124,100
Net operating income (loss)	$	30,600		$	21,900		$	25,800		$	(17,100)

*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.