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	$	920,000		$	262,000		$	403,000		$	255,000
Variable manufacturing and selling expenses		479,000			112,000			208,000			159,000
Contribution margin		441,000			150,000			195,000			96,000
Fixed expenses:
Advertising, traceable		69,900			8,900			40,600			20,400
Depreciation of special equipment		44,100			20,900			7,600			15,600
Salaries of product-line managers		115,700			40,900			38,800			36,000
Allocated common fixed expenses*		184,000			52,400			80,600			51,000
Total fixed expenses		413,700			123,100			167,600			123,000
Net operating income (loss)	$	27,300		$	26,900		$	27,400		$	(27,000)

*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.