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	$ 931,000	$ 267,000	$ 405,000	$ 259,000
Variable manufacturing and selling expenses	467,000	118,000	192,000	157,000
Contribution margin	464,000	149,000	213,000	102,000
Fixed expenses:
Advertising, traceable	69,600	8,700	40,300	20,600
Depreciation of special equipment	43,400	20,600	7,200	15,600
Salaries of product-line managers	114,100	40,600	38,400	35,100
Allocated common fixed expenses*	186,200	53,400	81,000	51,800
Total fixed expenses	413,300	123,300	166,900	123,100
Net operating income (loss)	$ 50,700	$ 25,700	$ 46,100	$ (21,100)

*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.