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	$	927,000		$	267,000		$	409,000		$	251,000
Variable manufacturing and selling expenses		470,000			115,000			203,000			152,000
Contribution margin		457,000			152,000			206,000			99,000
Fixed expenses:
Advertising, traceable		69,000			8,400			40,300			20,300
Depreciation of special equipment		44,400			20,800			7,800			15,800
Salaries of product-line managers		114,100			40,600			38,400			35,100
Allocated common fixed expenses*		185,400			53,400			81,800			50,200
Total fixed expenses		412,900			123,200			168,300			121,400
Net operating income (loss)	$	44,100		$	28,800		$	37,700		$	(22,400)

*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.