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	$	926,000		$	263,000		$	403,000		$	260,000
Variable manufacturing and selling expenses		479,000			117,000			206,000			156,000
Contribution margin		447,000			146,000			197,000			104,000
Fixed expenses:
Advertising, traceable		70,700			8,900			40,800			21,000
Depreciation of special equipment		43,600			20,500			7,800			15,300
Salaries of product-line managers		115,600			40,300			38,700			36,600
Allocated common fixed expenses*		185,200			52,600			80,600			52,000
Total fixed expenses		415,100			122,300			167,900			124,900
Net operating income (loss)	$	31,900		$	23,700		$	29,100		$	(20,900)

*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.