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		$	264,000		$	403,000		$	255,000
Variable manufacturing and selling expenses		461,000			111,000			200,000			150,000
Contribution margin		461,000			153,000			203,000			105,000
Fixed expenses:
Advertising, traceable		70,000			8,500			40,900			20,600
Depreciation of special equipment		43,900			20,600			7,800			15,500
Salaries of product-line managers		115,600			40,000			38,600			37,000
Allocated common fixed expenses*		184,400			52,800			80,600			51,000
Total fixed expenses		413,900			121,900			167,900			124,100
Net operating income (loss)	$	47,100		$	31,100		$	35,100		$	(19,100)

*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.