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	$	929,000		$	266,000		$	407,000		$	256,000
Variable manufacturing and selling expenses		463,000			111,000			195,000			157,000
Contribution margin		466,000			155,000			212,000			99,000
Fixed expenses:
Advertising, traceable		69,800			8,700			40,200			20,900
Depreciation of special equipment		43,400			21,000			7,100			15,300
Salaries of product-line managers		114,800			40,700			38,500			35,600
Allocated common fixed expenses*		185,800			53,200			81,400			51,200
Total fixed expenses		413,800			123,600			167,200			123,000
Net operating income (loss)	$	52,200		$	31,400		$	44,800		$	(24,000)

*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.