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	$	929,000		$	267,000		$	406,000		$	256,000
Variable manufacturing and selling expenses		465,000			110,000			205,000			150,000
Contribution margin		464,000			157,000			201,000			106,000
Fixed expenses:
Advertising, traceable		69,900			8,600			40,900			20,400
Depreciation of special equipment		43,000			20,100			7,100			15,800
Salaries of product-line managers		116,500			41,000			39,000			36,500
Allocated common fixed expenses*		185,800			53,400			81,200			51,200
Total fixed expenses		415,200			123,100			168,200			123,900
Net operating income (loss)	$	48,800		$	33,900		$	32,800		$	(17,900)

*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.