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	$ 935,000	$ 267,000	$ 409,000	$ 259,000
Variable manufacturing and selling expenses	470,000	116,000	204,000	150,000
Contribution margin	465,000	151,000	205,000	109,000
Fixed expenses:
Advertising, traceable	70,100	8,400	40,900	20,800
Depreciation of special equipment	43,500	20,700	7,500	15,300
Salaries of product-line managers	114,000	40,000	38,500	35,500
Allocated common fixed expenses*	187,000	53,400	81,800	51,800
Total fixed expenses	414,600	122,500	168,700	123,400
Net operating income (loss)	$ 50,400	$ 28,500	$ 36,300	$ (14,400)

*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.