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	$ 920,000	$ 261,000	$ 403,000	$ 256,000
Variable manufacturing and selling expenses	475,000	119,000	198,000	158,000
Contribution margin	445,000	142,000	205,000	98,000
Fixed expenses:
Advertising, traceable	70,000	8,600	40,800	20,600
Depreciation of special equipment	43,500	20,400	7,500	15,600
Salaries of product-line managers	115,600	40,700	38,000	36,900
Allocated common fixed expenses*	184,000	52,200	80,600	51,200
Total fixed expenses	413,100	121,900	166,900	124,300
Net operating income (loss)	$ 31,900	$ 20,100	$ 38,100	$ (26,300)

*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.