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		$	269,000		$	403,000		$	250,000
Variable manufacturing and selling expenses		471,000			117,000			201,000			153,000
Contribution margin		451,000			152,000			202,000			97,000
Fixed expenses:
Advertising, traceable		69,300			8,100			40,200			21,000
Depreciation of special equipment		43,800			20,800			7,700			15,300
Salaries of product-line managers		115,800			40,900			38,000			36,900
Allocated common fixed expenses*		184,400			53,800			80,600			50,000
Total fixed expenses		413,300			123,600			166,500			123,200
Net operating income (loss)	$	37,700		$	28,400		$	35,500		$	(26,200)

*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.