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		$	403,000		$	257,000
Variable manufacturing and selling expenses		470,000			118,000			195,000			157,000
Contribution margin		457,000			149,000			208,000			100,000
Fixed expenses:
Advertising, traceable		69,800			8,900			40,600			20,300
Depreciation of special equipment		43,000			20,100			7,700			15,200
Salaries of product-line managers		114,600			40,100			38,100			36,400
Allocated common fixed expenses*		185,400			53,400			80,600			51,400
Total fixed expenses		412,800			122,500			167,000			123,300
Net operating income (loss)	$	44,200		$	26,500		$	41,000		$	(23,300)

*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 or (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued? Y/N

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.