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	$	922,000		$	267,000		$	401,000		$	254,000
Variable manufacturing and selling expenses		463,000			116,000			194,000			153,000
Contribution margin		459,000			151,000			207,000			101,000
Fixed expenses:
Advertising, traceable		69,900			8,600			40,800			20,500
Depreciation of special equipment		43,900			20,400			7,900			15,600
Salaries of product-line managers		115,400			40,400			39,000			36,000
Allocated common fixed expenses*		184,400			53,400			80,200			50,800
Total fixed expenses		413,600			122,800			167,900			122,900
Net operating income (loss)	$	45,400		$	28,200		$	39,100		$	(21,900)

*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.