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	$ 929,000	$ 264,000	$ 407,000	$ 258,000
Variable manufacturing and selling expenses	476,000	113,000	204,000	159,000
Contribution margin	453,000	151,000	203,000	99,000
Fixed expenses:
Advertising, traceable	69,900	8,500	40,600	20,800
Depreciation of special equipment	43,600	20,600	7,400	15,600
Salaries of product-line managers	116,400	40,900	38,700	36,800
Allocated common fixed expenses*	185,800	52,800	81,400	51,600
Total fixed expenses	415,700	122,800	168,100	124,800
Net operating income (loss)	$ 37,300	$ 28,200	$ 34,900	$ (25,800)

*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.