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	$	919,000		$	262,000		$	406,000		$	251,000
Variable manufacturing and selling expenses		470,000			117,000			201,000			152,000
Contribution margin		449,000			145,000			205,000			99,000
Fixed expenses:
Advertising, traceable		69,600			8,300			40,800			20,500
Depreciation of special equipment		44,200			20,900			7,800			15,500
Salaries of product-line managers		115,600			40,900			38,600			36,100
Allocated common fixed expenses*		183,800			52,400			81,200			50,200
Total fixed expenses		413,200			122,500			168,400			122,300
Net operating income (loss)	$	35,800		$	22,500		$	36,600		$	(23,300)

*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.