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	$	923,000		$	266,000		$	405,000		$	252,000
Variable manufacturing and selling expenses		476,000			118,000			203,000			155,000
Contribution margin		447,000			148,000			202,000			97,000
Fixed expenses:
Advertising, traceable		69,800			8,600			41,000			20,200
Depreciation of special equipment		43,800			20,600			7,300			15,900
Salaries of product-line managers		115,900			40,100			38,800			37,000
Allocated common fixed expenses*		184,600			53,200			81,000			50,400
Total fixed expenses		414,100			122,500			168,100			123,500
Net operating income (loss)	$	32,900		$	25,500		$	33,900		$	(26,500)

*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.