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	$	924,000		$	267,000		$	402,000		$	255,000
Variable manufacturing and selling expenses		473,000			120,000			194,000			159,000
Contribution margin		451,000			147,000			208,000			96,000
Fixed expenses:
Advertising, traceable		69,700			8,800			40,500			20,400
Depreciation of special equipment		43,300			20,400			7,300			15,600
Salaries of product-line managers		115,000			40,400			38,100			36,500
Allocated common fixed expenses*		184,800			53,400			80,400			51,000
Total fixed expenses		412,800			123,000			166,300			123,500
Net operating income (loss)	$	38,200		$	24,000		$	41,700		$	(27,500)

*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.