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	$ 923,000	$ 265,000	$ 403,000	$ 255,000
Variable manufacturing and selling expenses	466,000	114,000	192,000	160,000
Contribution margin	457,000	151,000	211,000	95,000
Fixed expenses:
Advertising, traceable	70,200	8,800	40,900	20,500
Depreciation of special equipment	42,800	20,100	7,400	15,300
Salaries of product-line managers	115,700	40,300	38,700	36,700
Allocated common fixed expenses*	184,600	53,000	80,600	51,000
Total fixed expenses	413,300	122,200	167,600	123,500
Net operating income (loss)	$ 43,700	$ 28,800	$ 43,400	$ (28,500)

*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.