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	$	919,000		$	263,000		$	405,000		$	251,000
Variable manufacturing and selling expenses		471,000			117,000			202,000			152,000
Contribution margin		448,000			146,000			203,000			99,000
Fixed expenses:
Advertising, traceable		70,000			8,400			40,800			20,800
Depreciation of special equipment		43,400			20,100			7,800			15,500
Salaries of product-line managers		116,500			41,000			38,800			36,700
Allocated common fixed expenses*		183,800			52,600			81,000			50,200
Total fixed expenses		413,700			122,100			168,400			123,200
Net operating income (loss)	$	34,300		$	23,900		$	34,600		$	(24,200)

*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.