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	$ 933,000	$ 268,000	$ 406,000	$ 259,000
Variable manufacturing and selling expenses	463,000	117,000	194,000	152,000
Contribution margin	470,000	151,000	212,000	107,000
Fixed expenses:
Advertising, traceable	69,800	8,200	40,900	20,700
Depreciation of special equipment	43,300	20,500	7,200	15,600
Salaries of product-line managers	115,200	40,100	38,700	36,400
Allocated common fixed expenses*	186,600	53,600	81,200	51,800
Total fixed expenses	414,900	122,400	168,000	124,500
Net operating income (loss)	$ 55,100	$ 28,600	$ 44,000	$ (17,500)

*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.