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		$	266,000		$	400,000		$	251,000
Variable manufacturing and selling expenses		464,000			116,000			196,000			152,000
Contribution margin		453,000			150,000			204,000			99,000
Fixed expenses:
Advertising, traceable		69,200			8,200			40,500			20,500
Depreciation of special equipment		44,300			21,000			7,500			15,800
Salaries of product-line managers		114,200			40,200			38,700			35,300
Allocated common fixed expenses*		183,400			53,200			80,000			50,200
Total fixed expenses		411,100			122,600			166,700			121,800
Net operating income (loss)	$	41,900		$	27,400		$	37,300		$	(22,800)

*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.