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	$ 919,000	$ 262,000	$ 402,000	$ 255,000
Variable manufacturing and selling expenses	479,000	114,000	209,000	156,000
Contribution margin	440,000	148,000	193,000	99,000
Fixed expenses:
Advertising, traceable	70,100	8,400	41,000	20,700
Depreciation of special equipment	43,900	20,800	7,200	15,900
Salaries of product-line managers	114,900	40,300	38,300	36,300
Allocated common fixed expenses*	183,800	52,400	80,400	51,000
Total fixed expenses	412,700	121,900	166,900	123,900
Net operating income (loss)	$ 27,300	$ 26,100	$ 26,100	$ (24,900)

*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.