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	$	925,000		$	262,000		$	406,000		$	257,000
Variable manufacturing and selling expenses		481,000			117,000			209,000			155,000
Contribution margin		444,000			145,000			197,000			102,000
Fixed expenses:
Advertising, traceable		69,700			8,300			40,900			20,500
Depreciation of special equipment		43,500			20,900			7,200			15,400
Salaries of product-line managers		115,400			40,600			38,200			36,600
Allocated common fixed expenses*		185,000			52,400			81,200			51,400
Total fixed expenses		413,600			122,200			167,500			123,900
Net operating income (loss)	$	30,400		$	22,800		$	29,500		$	(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.

Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quart