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	$ 932,000	$ 265,000	$ 409,000	$ 258,000
Variable manufacturing and selling expenses	473,000	113,000	203,000	157,000
Contribution margin	459,000	152,000	206,000	101,000
Fixed expenses:
Advertising, traceable	69,800	8,600	40,700	20,500
Depreciation of special equipment	43,400	20,400	7,200	15,800
Salaries of product-line managers	114,700	40,800	38,200	35,700
Allocated common fixed expenses*	186,400	53,000	81,800	51,600
Total fixed expenses	414,300	122,800	167,900	123,600
Net operating income (loss)	$ 44,700	$ 29,200	$ 38,100	$ (22,600)

*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.