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	$ 930,000	$ 264,000	$ 407,000	$ 259,000
Variable manufacturing and selling expenses	481,000	116,000	209,000	156,000
Contribution margin	449,000	148,000	198,000	103,000
Fixed expenses:
Advertising, traceable	70,000	8,500	40,900	20,600
Depreciation of special equipment	43,500	20,300	7,500	15,700
Salaries of product-line managers	116,500	40,800	39,000	36,700
Allocated common fixed expenses*	186,000	52,800	81,400	51,800
Total fixed expenses	416,000	122,400	168,800	124,800
Net operating income (loss)	$ 33,000	$ 25,600	$ 29,200	$ (21,800)

*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.