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	$	928,000		$	269,000		$	405,000		$	254,000
Variable manufacturing and selling expenses		467,000			118,000			195,000			154,000
Contribution margin		461,000			151,000			210,000			100,000
Fixed expenses:
Advertising, traceable		69,200			8,600			40,300			20,300
Depreciation of special equipment		43,100			20,200			7,200			15,700
Salaries of product-line managers		115,200			40,600			38,400			36,200
Allocated common fixed expenses*		185,600			53,800			81,000			50,800
Total fixed expenses		413,100			123,200			166,900			123,000
Net operating income (loss)	$	47,900		$	27,800		$	43,100		$	(23,000)

*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.