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		$	264,000		$	403,000		$	257,000
Variable manufacturing and selling expenses		475,000			115,000			203,000			157,000
Contribution margin		449,000			149,000			200,000			100,000
Fixed expenses:
Advertising, traceable		69,900			8,900			40,600			20,400
Depreciation of special equipment		43,200			20,200			7,500			15,500
Salaries of product-line managers		114,500			40,400			38,700			35,400
Allocated common fixed expenses*		184,800			52,800			80,600			51,400
Total fixed expenses		412,400			122,300			167,400			122,700
Net operating income (loss)	$	36,600		$	26,700		$	32,600		$	(22,700)

*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.