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	$ 916,000	$ 262,000	$ 402,000	$ 252,000
Variable manufacturing and selling expenses	464,000	112,000	200,000	152,000
Contribution margin	452,000	150,000	202,000	100,000
Fixed expenses:
Advertising, traceable	69,600	8,200	40,700	20,700
Depreciation of special equipment	43,600	20,500	7,700	15,400
Salaries of product-line managers	113,600	40,300	38,100	35,200
Allocated common fixed expenses*	183,200	52,400	80,400	50,400
Total fixed expenses	410,000	121,400	166,900	121,700
Net operating income (loss)	$ 42,000	$ 28,600	$ 35,100	$ (21,700)

*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.