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		$	265,000		$	404,000		$	253,000
Variable manufacturing and selling expenses		463,000			119,000			192,000			152,000
Contribution margin		459,000			146,000			212,000			101,000
Fixed expenses:
Advertising, traceable		69,300			8,100			40,900			20,300
Depreciation of special equipment		43,300			20,400			7,800			15,100
Salaries of product-line managers		114,400			40,000			38,800			35,600
Allocated common fixed expenses*		184,400			53,000			80,800			50,600
Total fixed expenses		411,400			121,500			168,300			121,600
Net operating income (loss)	$	47,600		$	24,500		$	43,700		$	(20,600)

*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.