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		$	269,000		$	400,000		$	250,000
Variable manufacturing and selling expenses		468,000			118,000			196,000			154,000
Contribution margin		451,000			151,000			204,000			96,000
Fixed expenses:
Advertising, traceable		69,200			8,400			40,600			20,200
Depreciation of special equipment		44,400			20,800			8,000			15,600
Salaries of product-line managers		114,900			40,500			38,300			36,100
Allocated common fixed expenses*		183,800			53,800			80,000			50,000
Total fixed expenses		412,300			123,500			166,900			121,900
Net operating income (loss)	$	38,700		$	27,500		$	37,100		$	(25,900)

*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.